A gradual recovery is under way in the market for floating production systems with contracts totalling more than $15 billion inked over the past year, according to a fresh analysis from Energy Maritime Associates.

The uptick in orders has resulted in the highest level of spending in this market since 2014 when a slump in oil prices hit demand for floaters due to field development cutbacks, with renewed field sanctions due to lower costs and more stable oil prices driving fresh floater activity.

The Singapore-based firm said 10 floating production, storage and offloading vessels have been awarded since the fourth quarter of 2016, further incentivised by lower yard prices.

Among recent high-profile floater awards are the contracts for the hull and living quarters for Statoil’s Johan Castberg FPSO off Norway handed to Sembcorp Marine, with SBM Offshore picking up the turret job, and the FLNG unit for Eni’s Coral South project off Mozambique won by a consortium comprising TechnipFMC, JGC of Japan and Samsung Heavy Industries of South Korea.

This has fuelled spending of more than $15 billion over the past 12 months - compared with $3.9 billion last year and $5.9 billion in 2015 - as expenditure approaches a level of $16.5 billion seen in 2014.

EMA predicted market demand for 124 floating production systems (FPS) - including FPSOs, FLNGs, FSRUs, tension-leg platforms, spars, semi-submersibles and floating storage units - with spending of $94 billion over the next five years, based on a mid-case forecast out of between 80 and 173 units.

FPSOs will account for around 40% of this demand and two-thirds of capital expenditure, with Brazil’s state-owned Petrobras expected to account for about a quarter of FPSO awards over at least the next five years as it resumes ordering activity after a two-year hiatus, according to the firm.

“Close to $50 billion is expected to be spent on FPS projects in Brazil and Africa, driven by large, deep-water FPSOs as well as a few mid-size FLNG developments,” EMA stated.

Managing director David Boggs said “confidence in deep-water developments has returned”, evidenced by the $2.6 billion FPSO deal for Johan Castberg and $5.4 billion contract for the Coral South FLNG unit.

“At today’s oil price, there are an increasing number of viable offshore projects as a result of revised development plans, lower supply chain costs, and flexible commercial terms,” he said.

“The next few years provide a unique window of opportunity to sanction offshore developments and take advantage of record low drilling rates and adequate industry capacity.”

EMA said a record tally of 11 FSRUs has been awarded this year, of which five have been ordered on speculation, driven by yard discounts and new entrants into this market.

It said 10 floating storage and regasification units are now on speculative order in addition to one available unit.

“Additional FSRUs will begin coming off contract and it remains to be seen how easily they can find new employment,” the firm stated.

Furthermore, EMA stated redeployment of idle floaters is on the rise and FPSOs are expected to account for around 25% of future awards for redeployed units.

It stated though the number of idle units is expected to remain high, with another 39 units likely to become available within the next two years, in addition to 46 FPSs that are currently available.

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EMA: 'Floaters back in fashion'