Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

FPSO market may face a tougher year ahead after sombre 2015

FPSO market may face a tougher year ahead after sombre 2015
The floating, production, storage and offloading (FPSO) market could be facing its toughest year in 2016 yet after it concluded 2015 with the least number of contracts awarded since 2009, according to analyst Energy Maritime Associates (EMA).

David Boggs, managing director of EMA, told the Singapore Offshore Finance Forum late last week that the FPSO market had grown at a stellar pace since 1990, but the crash in crude oil prices has now cast a gloomy outlook for the sector.

Last year, only four FPSO contracts were awarded, the lowest number since seven seen within the past decade in 2009. In 2014 and 2013, 11 and 12 FPSO contracts were awarded, respectively, by comparison.

Adding on to the increasing dearth of jobs in the offshore market, the current orderbook of 35 new FPSOs is putting further pressure on the segment, according to data presented by Boggs. The 35 newbuildings planned for delivery in 2016 represented 44% of the FPSO orderbook, pointing to more new units slated to hit the water amid the lackluster market.

“Consolidation is now expected among contractors, oil firms and the supply chain operators,” Boggs noted. On the brighter side, there are still pockets of offshore activities continuing in Brazil and West Africa, while the Australia and China markets have also been stirring interests among players.

In fact, a recent report published last month by Transparency Market Research projected the FPSO market to grow at a compounded annual rate of 16.2% from 2015 to 2021 to reach a value of $43.39bn from the value of $15.86bn in 2014.

The anticipated growth is attributed to the undying investments in offshore exploration in Brazil and development of new oil fields in the region, despite the low oil prices. The Africa region, in addition, is also expected to see growth due to the rise in demand for installation of FPSO units in the fields of Angola, Ghana, Nigeria and Guinea.

In the year ahead, however, Hassan Assad Basma, founder and ceo of HBA Offshore, preferred to view the FPSO market as being challenged, and the “worse is yet over and one can expect some ‘spectacular’ developments by mid-year.”

Apart from the problems of oversupply and lack of contracts, Hassan further questioned the availability of financing as a much-needed support for the ailing offshore market as banks have become particularly cautious especially towards new players with no track records.

“How will banks look at financing new clients who acquired assets from strained oil producers and who seek the usual contractors to carry out the projects?” he asked.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish
TMSRPan21-22 Category Promo 600_600-resize
Read Now

The 21st Edition of Panama Maritime Review

"We will invest in digital transformation, exploring innovative ways in which we can maxinimise the Canal's capacity to provide value guarentee quality of service to our customers."

Ricaurte Vásquez Morales, Panama Canal Administrator

Read Panama Maritime Review 2021/22 to find out more.

TMSRPan21-22 Category Promo 600_600-resize