FPSO market set for rebound in 2021

After recording 20 awards for floating production, storage and offloading (FPSO) vessels over the last two years, only a single contract is expected to be awarded in 2020, as E&P companies delay projects during the oil downturn.

With oil companies cutting capex budgets by over 25%, and oil price levels at 30% below where they started 2020, the FPSO-sanctioning slowdown forecast by Norway energy analyst Rystad Energy should come as no surprise.

Rystad Energy analyst Aleksander Erstad, however, sees similarities in the last downturn in 2016, when not a single FPSO contract was awarded. Following no activity in 2016, sanctioning quickly rebounded, with 27 awards in the three-year period from 2017 to 2019.

“This time too, we expect to see a speedy comeback in FPSO sanctioning with seven projects expected next year, including Bacalhau and Mero 3 in Brazil and Payara (Prosperity) in Guyana,” said Mr Erstad.

“We expect a speedy comeback in FPSO sanctioning, with seven projects expected next year”

Tokyo-headquartered Modec International reported the only contract awarded this year. Valued at about US$1.5Bn, Modec will supply a newbuild FPSO for Woodside’s Sangomar development in Senegal. The vessel, which will be the first FPSO to operate in Senegal, will be supplied on a turnkey basis and feature topsides capable of handling 100,000 barrels per day (bpd) of oil and 130M cubic feet per day (cfd) of gas.

Brazil seems the most active of the FPSO markets, with state-run Petrobras poised to launch a tender in Q3 for one of the largest deepwater production units for Buzios. In other activity in the region, BW Offshore’s BW Cidade de São Vicente FPSO will remain employed until 9 October 2020 working for Petrobras, following an amendment to its charter. BW Cidade de São Vicente is currently conducting an extended well test at Farfan in the Sergipe-Alagoas basin.

A contract has been placed by Modec Offshore Production Systems with BrasFELS shipyard, a Brazilian subsidiary of Keppel Offshore & Marine Ltd, for the topside module fabrication for an FPSO for the Buzios field in the Santos Basin.

Work on FPSO Almirante Barroso MV32 will start in Q3 2020 at the BrasFELS shipyard in Angra dos Reis, with delivery in Q4 2021. When completed, the vessel will be capable of processing 150,000 barrels of oil and 212M scfd of gas, with a minimum storage capacity of 1.4M barrels of oil.

In July, Petrobras awarded a US$325M contract to Saipem for the installation of a rigid riser-based subsea system to serve the Búzios pre-salt project, in water depths up to 2,190 m. The Búzios-5 overall production system foresees the interconnection of 15 wells to the FPSO in two phases. The project awarded to Saipem includes the engineering, procurement, construction and installation (EPCI) of the Steel Lazy Wave Risers (SLWR) and associated flowlines between all wells and the FPSO.

The 163-m, dynamic positioning class 3-capable field development ship Saipem FDS will be deployed for all the subsea works.

Under a second contract, Modec has also placed an order with Keppel Shipyard in Singapore to fabricate, complete and integrate the topside modules and mooring support structure for an FPSO.

Components for the modules and mooring support structure will be completed, integrated and installed in the FPSO hull when it arrives at the shipyard in Q4 2020.

After delivery in Q2 2021, the FPSO will be equipped to process 90,000 barrels of oil and 75M scfd of gas and store 700,000 barrels of oil.

Japan’s ‘K’ Line will own about a 10% stake in the FPSO owning and chartering business for the Marlim II Project, offshore Rio de Janeiro, following an agreement with Yinson Acacia Ltd, a subsidiary of Malaysia’s Yinson Holdings Bhd, and Sumitomo Corporation. The FPSO is planned to serve the Marlim oil and gas field revitalisation project. Operations will start in Q1 2023, with a 25-year charter period.