BW buoyant on FPSO demand

Making headway: demand for FPSOs such BW Pioneer

BW Offshore sees a significant uptick in demand for floating production, storage and offloading vessels over the next five years after an earlier market contraction triggered by project delays and cost overruns.

The Oslo-listed floater contractor estimates a demand for 70 such vessels to 2018, of which 55 units would be newbuilds or conversions and the remaining 15 set to be redeployed from other fields, according to an investor presentation on Thursday.

BW is targeting a slice of capital expenditure by oil companies on FPSO projects estimated at $82 billion over the same period.

The more bullish outlook follows a market shakedown due to lower project demand in recent years that has led to consolidation of the sector, with now only seven active players.

As a result, the supply-demand balance going forward appears more positive, with the tally of lease awards starting to exceed the number of contractors, according to the company.

BW is now the joint market leader with SBM Offshore – each with a fleet of  17 FPSOs, including units under construction – alongside smaller rivals Modec, Teekay Petrojarl, Bumi Armada, Bluewater and Yinson Holdings, which recently acquired Norway's Fred Olsen Production.

The company said there is now “solid demand” for FPSO, as well as fewer contractors, while projects typically have greater technological complexity and higher capex, increasing barriers to entry.

BW, with a current order book of $10 billion having recently bagged the coveted FPSO award on Premier Oil’s newly approved Catcher field off the UK, sees a total of up to 45 potential floater contract opportunities over the next three years off Brazil, Africa and in South-East Asia.

There could also be a handful of further awards in the Gulf of Mexico and Northern Europe, it said.

The jury is currently out on the concept for Statoil’s stalled Johan Castberg project in the Barents Sea where an FPSO was recently touted by research firm Wood Mackenzie as a more commercially viable solution to develop the Arctic field, with a decision by the Norwegian state-owned operator expected imminently.

Newsletter signup

User

Become an Upstream member!

Membership includes a subscription to our weekly newspaper providing in-depth news from the energy industry, plus full-access to this site and its archives. Still not convinced? Try our free trial.

Already a member?

Login