North Sea players bring ‘rebound’ to FPSO market

Premier Oil's Catcher FPSO, which has seen record production levels.
Premier Oil's Catcher FPSO

North Sea work is helping bring the global FPSO market “back to life” according to a new report from Rystad Energy.

More than 30 floating production, storage and offloading projects could be sanctioned between next year and 2021.

This includes a “rebound” in Europe and West Africa, with two North Sea projects already confirmed this year in Shell’s Penguins redevelopment and Cheviot from Alpha Petroleum.

Numerous FPSO awards are poised for final investment decisions going beyond this year, according to Rystad.

Bridge Petroleum has submitted a field development programme for its Galapagos project, and the company has said an Aframax-size tanker has been identified for hull conversion.

Siccar Point Energy also recently entered into an agreement with FPSO specialist Crondall Energy for studies on its Cambo oil field west of Shetland.

The operator has indicated it is looking into a newbuild option, as well as redeployment or conversion for Cambo.

The number of FPSOs coming into the market depends on oil price, with cost-cutting efforts in the downturn being a contributor to the favourable economics of most of the projects.

A total of 14 have a breakeven price of below $50 a barrel, while 15 more come in between $50 and $70.

Just three have breakevens of above $70.

Rystad said in the report: “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.”