press release

FPSO market finally set to rebound

November 15, 2018
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Please note that Audun Martinsen, Head of Oilfield Research will be speaking about the Evaluation of Oil Markets in 2019 at the FPSO Europe Congress on the 19th of February 2019.
Find out more about the congress here:

The global floating production market has stirred back to life after enduring a couple years in virtual hibernation during the downturn. Last year brought some relief to the market – with six new FPSO orders worldwide – and momentum has picked up further this year, buoyed by higher oil prices, technological advancements and lower costs.

Low-cost pipeline

More than 30 FPSO projects could reach FID between 2019 and 2021.The cost-cutting efforts implemented during the downturn are a major contributor to the favorable economics of most of these projects. Fourteen floater projects have a breakeven of below $50 per barrel, according to Rystad Energy research, while 15 more come in at between $50 and $70 per barrel. Just three of the expected projects have breakevens above $70 per barrel. The pipeline of projects indicates that FPSO awards are set for a strong comeback, driven in particular by South America.

 A bar chart showing the number of projects planned to be committed 2019-2021 by breakeven classes in number of fields with FPSO`s, Source: DCube

Europe and West Africa are also set for a rebound in floater awards. This year, two FPSO projects have already been confirmed:

  • Fluor secured the contract for a newbuild FPSO for Shell’s Penguins project in the UK
  • Teekay Offshore won an order for the redeployment of the Petrojarl Varg FPSO for Alpha Petroleum’s Cheviot project, also in UK waters.

Looking beyond this year, numerous FPSO awards are shaping up for final investment decision. Siccar Point Energy recently awarded Crondall Energy a frame agreement to support studies for the Cambo oil field west of Shetland. The operator has indicated that it will evaluate both a newbuild option and redeployment or conversion as potential development solutions. Also in UK waters, Bridge Petroleum has filed a field development plan with the UK’s Oil & Gas Authority for its Galapagos project, and the company has communicated that an ice-class Aframax-size tanker has been identified for hull conversion. Bridge is currently farming down the field development as part of the financing process for the project.


In Senegal, Cairn Energy and its partners are currently reviewing tenders for a large FPSO and supporting subsea infrastructure for the deepwater SNE project. A final investment decision is expected in the first half of 2019, with the operator having indicated that its preferred development solution is a redeployed FPSO. In Ghana, Aker Energy gained operatorship of the DWT/CTP block after acquiring Hess Ghana earlier this year. The development plan has not yet been submitted, but recent signals from the operator suggest that the Pecan field in DWT/CTP block will be developed via a purpose-built FPSO.


In Nigeria, we expect to see a final investment decision in 2020 for Shell’s Bonga South-West project. The base case is said to involve a newbuild FPSO, but the operator could also revert to a tanker conversion project if newbuild costs prove to be excessive. Another Nigerian deep-water project, ZabaZaba, could be sanctioned next year, although delays could be caused by issues such as strict local content regulations and an ongoing corruption scandal surrounding the OPL 245 production license. Local content remains a key factor with serious cost implications in any tendering process in Nigeria, with demands that 50% of module fabrication work and all topside integration work must be handled domestically. The expression of interest process requires bidders to specify their chosen partners and identify which Nigerian engineering and fabrication companies they could work with.


However, in spite of such hurdles on certain projects, the overall picture for the FPSO industry is bright, with dozens of new field development projects to pursue over the next two to three years. A key challenge going forward will be project execution and cost control.



Lars Røberg Følgesvold
Analyst, Oilfield Service Research
Phone: +47 24 00 42 00
Mobile: +47 48 18 68 82

Julia Weiss
SVP, Head of Marketing
Main: +47 24 00 42 00
Mobile: +47 48 29 87 61

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