Production Floater Market Outlook Brightening
IMA/WER has just completed its Annual Review and Five-Year Forecast of Orders for Floating Production Systems. The report:
•provides a detailed look back at developments in the deepwater sector over the past year,
•assesses 12 underlying market drivers that will determine the pace of production floater orders over the next five years,
•identifies specific projects in the planning queue that will likely require a production floater and
•forecasts the number of orders and capex for production floaters between 2023 and 2027.
There has been a strong recovery in the deepwater sector, and the business environment is now much different than a few years ago. Crude oil prices have rebounded to the $80s+, and upstream operators are reporting record profits.
Operators are still holding back on major increases in capital spending, but this is changing. Oil prices have risen to levels that support investment in new facilities, and capex budgets are slowly expanding. The profit opportunities are too great to pass up.
Meanwhile, orders for production floaters have returned to historic pace, and a large backlog of deepwater projects has developed. More than 200 projects in the planning stage are likely to require a floating production system for field development over the coming decade. The backlog includes approximately 60 projects requiring an FPSO within the next five years.
Overall, we see the deepwater sector in 2023/27 entering a period of sustained strength and expansion. This despite the attention now being paid to transition away from fossil fuel. As we discuss in our annual review, the alternatives to fossil fuel are costly and less reliable. Fossil fuel will be required for the foreseeable future – and deepwater resources will remain a key source of future oil and gas supply.