FPS spending to increase, says Douglas-Westwood

Offshore staff

LONDON – Douglas-Westwood’s “World Floating Production Market Forecast 2015-2019” projects that $68 billion will be spent on FPS units between 2015 and 2019 – an increase of 49% compared to 2010-2014.

Despite capex growth over the forecast, orders this year have been very weak with only four contract awards so far. This is a result of the low oil price impacting project sanctioning activity, compounded by recent history of high-cost FPS projects running late and/or over-budget.

In the near-term, DW said expect improvement next year. Operators have worked this year to redevelop projects to make them more cost effective and their efforts should see final investment decisions made on a number of projects.

One example DW gave is Mad Dog Phase 2 in the Gulf of Mexico, which was originally considered uneconomic when oil was priced at $110/bbl. With the major redesigns BP has undertaken (coupled with lower prices for equipment and services in the downturn) it is likely to be sanctioned next year, despite the current low oil price. 

FPSOs will represent by far the largest segment of the market both in terms of numbers (67 installations) and forecast capex (79%) during 2015-2019. FPSSs will account for the second largest segment of capex (9.3%) with TLPs third (9.2%).

11/03/2015

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