At least five more floating production, storage and offloading vessel contract awards are expected to be awarded globally this year, according to a senior executive at floater giant SBM Offshore.
The plethora of hoped-for contracts include FPSO conversions, newbuild orders and redeployments, managing director, Malaysia Ivan Replumaz said at an FPSO conference in Singapore on Monday.
The first of the year has already come to fruition - Eni's Offshore Cape Three Points FPSO award in Ghana in January. The other five awards include small and mid-sized FPSOs, Replumaz said.
Conversions remain the preferred option at 55%-60% of the expected awards total, with newbuilds making up 25%-30% and redeployments at 10-15%.
However, conversions are becoming more expensive due to higher tanker purchase prices and the extent of remedial work on the vessels.
Relocations are gaining momentum in countries such as Malaysia but are highly dependent on good design matches between projects, Replumaz said.
The executive said, however, that prospects for new floater projects remain poor – with the timing of schemes such as Woodside Petroleum’s Browse project in Australia uncertain amid poor market conditions.
Replumaz said FPSO providers continue to ensure cost reductions though increased rationalisation within framework agreements with equipment suppliers.
He argued that there are typically no re-negotiations of FPSO charter rates after deals have been concluded, one benefit of the segment as compared with the drilling or offshore vessel owner markets.
Replumaz also observed that oil companies rarely cut their capital expenditure in two consecutive years – claiming this has only occurred once before in thirty years.
Although this is not likely to happen for 2015 and 2016, Replumaz conceded that it remains a possibility.