A collection of new orders may signal good news for the floating production sector, says a recent market report from International Maritime Associates and World Energy Reports (IMA/WER).
Since the start of 2019, there have been 10 orders for floating production units, including five FPSO, two production semis, an FSRU, FLNG and FSO, according to IMA/WER's latest monthly report, which analyzes resent developments and details the status of 480 projects in the planning stage, under construction, installed and available.
The report identifies two floater projects that have moved to the development stage within the past month: Chevron selected a yard to build the semisubmersible hull for its Anchor project in the Gulf of Mexico, and ONGC awarded the lease for an FPSO for use offshore the east coast of India. In addition, Woodside selected the FEED contractor for the Scarborough semi hull and mooring system.
Jim McCaul, head of IMA/WER, said, “Slowly but surely the production floater business is returning to a pre-2014 pace of new project starts. Market sentiment is turning increasingly positive.”
“Crude demand is growing at 1.3 mb/d, near term supply disruption risk is high and the cost of developing deepwater resources is falling. Meanwhile oil prices have been hovering in the $70 to $75 range since December – a level supportive of investment decisions,” McCaul explained.
All of this could signal good news for both new and developing projects.
“We expect more than 30 FPSO/FPU projects to move to development within the next 18 months. Another 40 projects are in line for FID within the next 18 to 60 months – and more than 50 more could move to FID in the second half of the 2020s,” McCaul said.
Looking forward, IMA/WER has identified more than 220 floating production projects now in various stages of planning and development.
Just more than half (51%) of these projects will require an FPSO, 8% an FPU, 36% a liquefaction or regasification floater and 5% a storage/offloading floater, according to IMA/WER.
IMA/WER expects 68% of the projects could lead to a production/storage system contract within the next five years, 32% are longer term projects with the production unit order likely after 2024.