USD 81 billion will be spent on Floating Production and Storage units (FPS) between 2015 and 2019, 73% more compared to 2010-2014, despite the current low oil price environment, the market analysts from Douglas-Westwood project in their ”World Floating Production Market Forecast 2015-2019.”
The value of annual installations is projected to grow from nearly USD 12bn in 2015 to USD 21bn in 2017 before declining to USD 17bn in 2019, with projects already ordered accounting for much of this spend.
Despite Capex growth, the report forecasts this year to be poor with orders. The low oil price is expected to impact the market, leading to a number of delayed project sanctions. Douglas-Westwood says that this can be seen in the declining number of orders for 2015 and subsequent installation decline in 2018. Projects already under construction are unlikely to be affected.
Floating Production, Storage and Offloading units (FPSO) represent by far the largest segment of the market both in numbers (87 installations) and forecast Capex (81%) during 2015-2019.
Latin America will see nearly a third of the 110 installations forecast and 32% of the projected Capex. Asia accounts for nearly a quarter of forecast installations, but only 13% of spend. Africa is important in value terms, with 22% of the projected Capex. Western Europe is expected to form 15% of forecast spend. Deepwater expenditure will make up 68% of the global FPS market.
”Financing remains a challenge for leasing contractors and smaller E&P companies as a result of the lower oil prices. Low oil prices have placed additional strain on company budgets and greater efforts are being made to ensure delays and cost over-runs are avoided. Local content requirements are also pushing up prices and extending lead times, particularly in Brazil,’‘ said Damilola Odufuwa, Report Editor.
Image: Eni Norge