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Rystad predicts rebound for FPSO industry in 2021

10/07/2020
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Energy analysts Rystad have revealed in their latest report that they anticipate awards for new FPSO contracts to increase again in 2021, following a pandemic-induced decline this year. 

FPSO projects are expected to rebound in 2021 following a fall this year
(Image via Anderson Nova / Flickr)

The report shows that just one new FPSO award is expected to be granted this year, as a result of the global impact the industry has felt during the Covid-19 pandemic. But the situation is expected to improve with a predicted seven new FPSO projects to be ordered next year. 

"Hit by the second industry downturn in five years, global awards for floating production, storage and offloading (FPSO) vessels will likely be limited to a single unit in 2020, Rystad Energy believes, as exploration and production firms slash budgets and activity. Similar to the previous downturn, awards are set to recover next year, with seven projects likely to be sanctioned,” the company claimed.

The only contract awarded so far in 2020 goes to Modec, who are due to deliver a new-build FPSO for Woodside’s Sangomar development in Senegal. The vessel will be supplied on a turnkey basis and feature topsides capable of handling 100,000 barrels per day of oil and 130 million cubic feet per day of gas. It will be the first FPSO to operate in Senegal and forms part of an anticipated total greenfield capex of around $4.2 billion for Sangomar phase 1.

Malaysia’s Yinson and Brazil’s Petrobras have also signed a contract in March for the Marlim 2 (Anna Nery) FPSO, though Rystad have not counted this one as the letter of intent was signed in 2019.

"For the remainder of 2020, we don’t expect to see any new FPSO contracts being awarded. Over the last 10 years, only 2016 saw a lower level of activity when not a single FPSO contract was awarded. However, from 2016 activity quickly rebounded with 27 awards in the three-year period from 2017 to 2019."

"This time too, we expect to see a speedy comeback in FPSO sanctioning with seven projects expected next year, including Bacalhau and Mero 3 in Brazil and Payara (Prosperity) in Guyana,”
says Aleksander Erstad, an energy research analyst in Rystad Energy.

Despite the downturn, there is hope that the oil & gas industry will recover, and it has already been made clear in past years that FPSOs are a vital addition to ultra-deepwater operations. 

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Rystad predicts rebound for FPSO industry in 2021 - Time to read 3 min
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