Floating production spend to total US$81 billion 2015-2019 but orders in declineNews // February 27, 2015
Douglas-Westwood’s new World Floating Production Market Forecast 2015-2019 forecasts that despite the current low oil price environment, between 2015 and 2019 US$81 billion will be spent on floating production units – an increase of 73 per cent compared to 2010-2014. The value of annual installations is projected to grow from nearly US$12 billion in 2015 to US$21 billion in 2017 before declining to US$17 billion in 2019. Projects already ordered will account for much of this spend.
Report author, Balwinder Rangi, said: "Despite Capex growth, the outlook this year for orders is poor. The low oil price is expected to impact the market, leading to a number of delayed project sanctions. This can be seen in the declining number of orders for 2015 and subsequent installation decline in 2018. Projects already under construction are unlikely to be affected.
“FPSOs represent by far the largest segment of the market both in numbers (87 installations) and forecast Capex (81 per cent) during 2015-2019. TLPs account for the second largest segment of Capex (9 per cent) with FPSSs third (7 per cent).
"Latin America will see nearly a third of the 110 installations forecast and 32 per cent of the projected Capex. Asia accounts for nearly a quarter of forecast installations, but only 13 per cent of spend. Africa is important in value terms, with 22 per cent of the projected Capex. Western Europe is expected to form 15 per cent of forecast spend. Deepwater expenditure will make up 68 per cent of the global FPS market.”
Report Editor, Damilola Odufuwa, said: "Financing remains a challenge for leasing contractors and smaller E&P companies as a result of the lower oil prices. Low oil prices have placed additional strain on company budgets and greater efforts are being made to ensure delays and cost over-runs are avoided. Local content requirements are also pushing up prices and extending lead times, particularly in Brazil."