Outlook for Floating Production Strong

Monday, April 13, 2009

IMA has just completed a detailed assessment of the floating production sector. The study examines the impact of the global economic downturn, assesses the underlying long term market drivers and forecasts production floater orders over the next five years.

The market for new floating production systems has frozen as a result of the abrupt downturn in the global economy. Over the past quarter no orders have been placed for production floaters. This is the first time since 1996, when IMA began tracking the floating production sector, where no orders have been placed during a reporting quarter.

As a result, order backlog for production floaters has dropped 30 percent from the same time last year. Several orders for production floaters have been delayed, including three FPSOs and a MinDoc. One FPSO operator has filed for bankruptcy and a second has sold its interest in an FPSO under construction. At least one other FPSO operator looks in tenuous condition. Many suppliers and conversion yards are increasingly concerned about workload.

Is the recent absence of orders and financial turmoil in the production floater sector a short term market aberration? Or is a structural change taking place that will impact the long term prospects for production floater contracts?

As detailed in IMA’s new study, the downturn appears temporary and the long term outlook for the production floater sector remains very strong.
• The long term fundamentals have not changed. Energy demand is widely expected to continue to grow at 1 to 1.5% annually over the next several decades. Oil is expected to be the primary source of future energy supply. Sources of oil are constrained. The finding and lifting cost of oil will continue to increase as more difficult oil sources are tapped.
• The futures market is indicating that oil will return to a $70 level within three years and $80 within eight years. While the immediate price of oil impacts cash available for investment, the expected price provides the basis for measuring project merit.
• Deepwater development has been constrained by rig availability. With almost double the number of deepwater drill rigs operating by 2012, the number of deepwater finds will undoubtedly increase. This will produce a growing requirement for floating production systems.

Solid indication of future prospects is provided by the number of projects at various stages of planning that involve the potential use of a floating production/storage system. In its study IMA identifies more than 155 projects that involve floating production sytems. About onethird of these are at an advanced stage of bidding or final design. All are valid projects that are likely to move forward.

IMA’s report provides a five year forecast of production floater orders. The forecast is based on a bottom up analysis of visible projects that potentially require floating production systems. IMA considers three market scenarios for oil price recovery over the next 12 to 24 months. Depending on the scenario, orders for 93 to 141 production floaters are anticipated over the next five years.
 IMA has published more than 35 reports on the floating production sector since the mid- 1990s. These reports have become a widely used reference source for companies operating, designing, building and financing floating production systems. In each report IMA identifies upcoming floater projects, evaluates developments impacting future floater system requirements and tracks industry market share.

Visit www.imastudies.com, or contact Jim McCaul at imaassoc@msn.com for the full report.

Maritime Reporter June 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Offshore

FLNG Prelude: A New Dawn in the Age of Maritime & Energy

Longer than four football fields, as big as six Nimitz-class aircraft carriers and almost as tall as the Taipei 101 skyscraper, Royal Dutch Shell PLC is hoping that its record-setting,

Corvus Energy, GMC Close Financing Agreement

Corvus Energy today announced that it has completed a strategic investment by Green Marine Capital (GMC) previously announced on May 5, 2014. Green Marine Capital,

Valemon Topsides Installed

On Monday, July 28, the topsides were lifted into place on the steel jacket on the Valemon field in the North Sea. Produced by Samsung Heavy Industries this is

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Navigation Offshore Oil Pipelines Pod Propulsion Port Authority Salvage Ship Repair Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1042 sec (10 req/sec)