Energy analysts Douglas-Westwood estimates in its World Floating Production Market Forecast that US$91 billion will be spent on FPSs during the period of 2013-2017. This marks a 100% increase over the previous five-year period, with the global CAPEX set to double.
Douglas-Westwood attributes the remarkable jump to factors including an increased number of newbuilds and conversions when compared to redeployments; a greater degree of local content requirements that can result in increased costs; and general inflation within the offshore oil and gas industry.
As exploration graduates into deeper waters, an industry-wide scramble to find cost-effective production methods generally follows. The deeper the water, the less options operators have; however, FPSOs are featured globally in some of the deepest projects in the world, including what will be the deepest project in the world: Shell’s Stones in the Gulf of Mexico. This could be why Douglas-Westwood found that FPSOs represent “the largest segment of the market both in numbers (94 installations) and forecast CAPEX (80%) over the 2013-2017 period. FPSSs account for the second largest segment of CAPEX (10%), followed by TLPs, then spars.”
The firm, which analyzed around 1000 FPS projects for the report, found that Latin America accounted for 29% of the forecast installations and 37% of the projected CAPEX, partially due to the fact that Brazilian state-owned Petrobras operates numerous fields in the country’s presalt that account for the bulk of the region’s FPSO installations. Despite the national’s high-profile troubles, including significant financial cutbacks and a scandal related to contractors, Douglas-Westwood expects that it will continue its hold on the region. Beyond Latin America, it noted, “Asia is the next most important region in numerical terms (24 installations, but Africa is so in terms of forecast CAPEX ($18.2 billion).”