OUTLOOK FOR FLOATING PRODUCTION SYSTEMS

IMA has just completed a new in-depth assessment of the outlook for FPSO vessels, production semis, TLPs and spars.  The 80 page report is the 19th in a series of in-depth analyses of this market sector that began in 1996. Some highlights...

Processing capacity on the water reaches 14 million b/d — 150 floating production systems are now in operation or available worldwide.  Installed on these systems is capacity to process 10.5 million b/d of oil.  Another 39 production floaters are on order.  When delivered, they will add a further 3.6 million b/d processing capacity.  With the incoming equipment, processing capacity on floating production systems will be more than 3½ times greater than the figure six years ago — almost double the capacity that existed just three years ago. 

Oil Processing Capacity on
Floating Production Systems
(millions of b/d)

Order intake has been tapering off — Only three production floaters have been ordered over the past four months, which works out to 0.75 floaters per month.  This is considerably less than the average intake over the past six years of 1.3 floaters per month.  As a result, the backlog of orders, which had been climbing since 1999, has fallen off the peak of 42 orders in hand seen earlier this year.

Backlog of Orders for Floating Production Systems

Several reasons can be suggested for the downturn.  One explanation is that several near term floater projects remain in the bidding and design phase, particularly off West Africa and Brazil, as a result of continued political issues holding up procurement.  Another explanation is that operators in the Gulf of Mexico have recently focused on developing subsea tiebacks to production hubs that have been installed or ordered.  No floaters have been ordered for the Gulf of Mexico since orders for the Red Hawk and Magnolia production units in the 2nd half 2002. A third factor could be that the sector has hit the top of its current expansion cycle and the heated level of orders over the past two years is subsiding to a more sustainable pace. Most probable is a combination of all three. 

Despite an obvious near term slowdown in order intake, we anticipate that the ordering pace will come back to the long term average level over the next several months. But we do not see orders in the 2nd half of 2003 getting to the heated pace that existed in 2001 and 2002. 

Long term outlook still very good — Longer term, we see a requirement for 245 to 270 floating production systems by the end of the decade.  Given the number of units in operation and currently on order, we see a need to order 62 to 89 additional floaters over the next five years to meet this requirement.  Of this total, 60 percent will be FPSO vessels, 30 percent spars or TLPs and 10 percent production semis.  The mixture of floater orders will produce a capex value of $22 to 31 billion over the five year forecast period.

Forecast of Floating Production Systems
in Operation at the End of the Decade

More than 90 projects in the planning pipeline — Driving the future ordering pace will be the large number of projects being planned or under study that could utilize a floating production system as the development solution.  In its report, IMA details 94 projects that have strong likelihood to utilize a floating production system should they move to the production stage.  24 of these projects are in the bidding or final design stage, 70 in the planning stage.  West Africa is the clear leader in near term projects, with 12 projects in the bidding or final design stage.  While the Gulf of Mexico has only one project in the bidding stage, there are 16 projects planned or under study.

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International Maritime Associates (IMA) was formed in 1973 to provide strategic planning support to clients in the offshore oil and gas, maritime and technology sectors.  We perform the research needed to size the available market, analyze customer requirements, assess competitor strengths/vulnerabilities and evaluate options for optimizing market position. 

For additional information, please contact:

Jim McCaul

Tel:  202-333-8501

Email:  imaassoc@msn.com