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Oil pricing continues to
hover in the mid-$50s, market confidence is slowly returning and the production
floater fabrication market is stirring.
A major order for a production
semi was placed in early January -- with Samsung receiving a contract to
build the production semi for BP's Mad Dog Phase 2 project. The $1.27 billion unit
will have capability to produce 110,000 b/d oil from 14 production wells. It will be used to develop further oil
discoveries near the original Mad Dog Spar in the Green Canyon area of the GOM.
This
contract brings to a close an eighteen month hiatus in oil production floater
orders. The last order (other than for
FSRUs and FSOs) was in early July 2015, when Shell contracted with Samsung to
build the Appomattox production semi. There has not previously been an FPSO/FPU contracting hiatus of this
duration. The previous worse was caused
by the global financial meltdown in 2007/08, which resulted in a 12 month dry
spell of floater orders. BP's order
is the forerunner of an influx of FPSO/FPU contracts as the oil market regains
demand/supply balance over the next 12 months. We expect at least a half dozen FPSO/FPU orders by the end of 2017 --
including 2 to 4 new units in Brazil, 1 to 3 in the North Sea and 1 or 2 in SE
Asia.
Activity also continues to be
brisk in the floating LNG sector. In
mid-January Hoegh finalized a contract with Samsung to build a 170,000 m3 LNG
regas carrier to be used as an FSRU terminal -- and included three option
contracts in the order. Hoegh also
contracted with Hyundai for a 170,000 m3 regas carrier to be employed as an FSRU
in Pakistan. Earlier in the month a
300,000 m3 FSRU was ordered for India and a small FSRU barge was ordered for
Indonesia.
On the liquefaction side, a
major award is imminent for an FLNG for use offshore Mozambique. The $4+ billion contract to be placed with Technip/Samsung/JGC will
likely have 1 or 2 option FLNGs. We
expect the order to be finalized within the next 30 days.
Meanwhile, Petrobras has
capitulated on completing the serial FPSO contract program and only five of the
eight FPSOs are to be built. Petrobras
has not formerly announced that the contracts to build the units have been
cancelled – but this is clearly the case.
We see the contracts for P 71-73 effectively terminated.
The
cancellation is bad news for fabricators and suppliers in Brazil. But one benefit did emerge from this
situation – expanded opportunities for FPSO leasing contractors. Leased units will be substituted for the
three serial hulls that are now history – e.g., the Sepia FPSO now being bid
replaces one of the three cancelled serial hulls. And it is unlikely that Petrobras will
revisit the local construction acquisition model in the foreseeable future.
Most likely future Petrobras FPSO requirements be satisfied by leased units –
and in future leases Petrobras will likely reduce the local content
requirements realistic targets to lower acquisition cost.
All this and more is covered
in WER's January report on the floating production business. In the report are details for 200+ floater
projects in the planning stage, 51 production or storage floaters now on order,
284 floating production units currently in service and 28 production floaters
available for redeployment contracts.
Charts in
the report update the location where floating production and storage systems
are being planned, operating, being built and to be installed.
Accompanying excel spreadsheets provide the report data in sortable
format. The search capability allows the user to sort and compile
information tailored to a specific requirement. Information in the database is updated on a daily basis from primary sources.
For more information, please see our website www.worldenergyreports.com or contact Jean Vertucci at 212 477 6700 or vertucci@marinelink.com. Where FPSOs Are Being Planned
About
Jim McCaul
Jim is
also the co-founder and editor of IMA/World Energy Reports, a New York based
business intelligence service for the floating production industry.
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