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FPSO market to reach US$8.65 billion in 2015

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The global capital spending on newbuild and converted floating production storage and offloading (FPSO) vessels could reach US$8.65 billion this year, according to consultancy firm Visiongain.

The largest spend will be focused on offshore South America and West Africa exploration projects due to the recent ultra deepwater pre-salt discoveries in those regions. Also, Southeast Asia will see more activity as those countries seek to supplement declining onshore oil and gas production with offshore reserves, the firm said.

However, Visiongain notes that low oil prices, and the completion of current FPSO work, will change market dynamics and reduce growth beginning in two years.

Meanwhile, spending on subsea systems is expected to increase. “Most offshore projects in water depths beyond 200-300m benefit from subsea production and processing systems to lift hydrocarbons to the surface. As a greater share of oil and gas is supplied from deeper water depths, investment in subsea production and processing systems will grow larger over the next 10 years,” reports the firm.

“Subsea systems not only enable operating companies to optimize production from offshore fields, they also increase the total amount of recoverable hydrocarbons over the life of the well. For example, with pressure boosting systems, total oil recovery rates are significantly increased. Some deepwater oil and gas reservoirs would not have been fully exploited without the aid of subsea systems,” states Visiongain.

A third industry sector that will continue to attract investment is the market for underwater remotely operated vehicles (ROVs), predicts the firm.

“The offshore industry of today could not function without them, as ROVs perform crucial installation, inspection and maintenance of subsea infrastructure. As activities in the offshore environment become more complex and the volume of such tasks increases, so does the demand on ROVs.”

Also, the amount of ageing infrastructure is increasing the amount of decommissioning and maintenance activity required offshore. Higher safety standards, especially in North America post-Macondo, are also increasing the frequency with which such activities are executed. To carry out such work, more ROVs are needed.

Additionally, gas developments offshore Australia, the eastern Mediterranean and East Africa are creating new demand for ROV services, reports Visiongain. “They are trends that will play a larger role determining ROV spending in the future as the cost of extracting and processing gas from remote offshore fields has a lower cost burden (re FLNG).”

Consequently, Visiongain forecasts strong spending growth on ROV services and newbuilds.

In fact, the firm forecasts that Europe will be the only region that will see declining demand for ROV services as North Sea production and drilling activity declines. However, decommissioning and maintenance activity still supports some spending levels, although low retirements for ROVs and the ability to improve and adapt current vehicles puts a downward pressure on newbuild spending.

The Original Posted by Jeannie Stell / OE

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