The floating production systems (FPS) market will rebound to $13 billion annually from 2021-24 with an average oil price of $60 per barrel, analysts have said.
This year was expected to be a “bumper” 12 months for FPS orders but the Covid-19 pandemic and associated price slump have resulted in a “backward step”, according to Westwood Global Energy Group.
Contract awards will reach a total of just over $5bn in 2020, down 59% on last year, and a 73% reduction compared to Westwood’s pre-Covid outlook.
The first three months of 2020 were marked by two key FPS contract awards – the Sangomar and Anna Nery FPSOs, destined for Senegal and Brazil, respectively.
Other key FPS EPC contracts still expected to be awarded in 2020 include Equinor’s Bacalhau unit and Petrobras’ Mero 3.
Mark Adeosun, senior analyst, offshore, said: “While the impact of the pandemic has hit FPS EPC contract awards significantly this year, the industry is in a much better place than the downturn of 2016 based on order intake so far, as well as the healthy backlogs of FPS contractors stemming from 2017-2019 activity.
“Despite this, the overall impact of Covid-19 on the FPS market represents a step backward for an industry which had expected 2020 to be a bumper year in 4Q2019”.
Over the 2020-24 period, probable FPS EPC contract awards are estimated at $56 billion.
Adeosun added: “Over the next five years, Latin America will account for nearly 42% of probable FPS awards – totalling an estimated $24bn. Brazil is expected to dominate investment, as international oil companies ramp up activity and Petrobras commits to the development of its pre-salt discoveries.
“Outside Brazil, Guyana will contribute two additional orders to the forecast in addition to the Liza Unity and the Prosperity FPSO that are currently being built in Singapore (Topsides) and China (Hull).”