Europe has nine FPSO projects in the pipeline through 2027 and more may be on the horizon. This is, in large part, due to the fact that the continent features smaller oilfields with shorter project lifespans, which translate to lower break-even prices (e.g., approximately $35.00 per barrel) for stakeholders to remain profitable.
With oil prices stabilising at around $60.00 per barrel, Norway and the UK appear particularly well-placed to build on the recent momentum generated by Europe’s FPSO market, as illustrated in this heat map produced by the organisers of the upcoming FPSO Europe Congress, in collaboration with IHS Markit.
Three projects have been awarded in the North Sea since 2018. These include a newbuild for Shell’s Penguins cluster of fields and a redeployment order from Alpha Petroleum Resources for its Cheviot development. More recently, Rosenberg Worley secured a contract to upgrade the Jotun A FPSO for Vaar Energi’s Balder X life extension project.
It’s widely believed that more awards will follow in 2020. The list of contenders includes the likes of Siccar Point Energy, which is pursuing a new-build for its Cambo field in the UK West of Shetland Area. In September, the company’s chief executive told Upstream that a final investment decision would likely be made in early 2020 to allow for first production in late 2023.
Today, market sources say nearly 30 current FPSO projects are actively looking for redeployment opportunities in Europe. The continent also boasts the 3rd largest number of FPSO orders in the world behind Brazil and Africa.
While the future looks promising, challenges remain. As such, solutions for issues related to project finance, manpower shortages, rising operating costs and increasingly stringent regulations will be a central focus at the next FPSO Europe Congress, which is scheduled to convene in London next month. In advance of this gathering, the organisers produced a heat map that provides a detailed overview of upcoming FPSO projects in the North Sea. You can download the market primer, which features data from IHS Markit, for free.