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The floating production sector has 'turned the corner': analyst

The floating production sector has 'turned the corner': analyst
The floating production sector has “turned the corner” according to analyst Energy Maritime Associates.

There were no orders for floating production units in Q4 2015 or Q1 2016 with orders starting to return in the shape speculative FSRU orders in Q2 2016. “For the past two years more LNG related units than FPSOs,” David Boggs, managing director Energy Maritime Associates told Marine Money’s Singapore Offshore Finance Forum.

Looking at the market as a whole Boggs said: “This year the floating production industry has turned the corner, still not back to the levels of 2014, but people are more optimistic going forward.”

Last quarter of 2016 saw seven floating production unit awards comprising three FPSOs, three FSRUs and one production semi for Mad Dog 2. The FPSO awards included the Liza from ExxonMobil to SBM Offshore which is yet receive the final investment decision and a move by BW Offshore to acquire a stake in the Dussafu production sharing contract in Gabon, which Boggs said was to secure employment for an existing FPSO unit.

Commenting on the BW move into field assets he said: “We’ll see if other contractors want to makes similar move.”

While the market it is recovering this is in part due to very low rates it very attractive for oil companies to sanction projects.

“The rates these days – people are working for less than costs, its unbelievable time and when is that going to happen again when you can get someone to work for less than it costs to operate the actual unit as an alternative is stacking which is actually going to cost them money,” Boggs said.

“So we actually think its great opportunity time for oil companies to sanction these projects for the next one- two years.”

There are some 51 idle production units at the moment most of which came off contract although a small number are speculative newbuilds that have never been employed.

Energy Maritime Associates believes half the idle units will eventually be scrapped with those built to higher specifications, and therefore more flexible in terms of deployment, most likely to find new contracts.

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