Page 32: of Maritime Reporter Magazine (April 2016)

Floating Production Systems

Contracts Hit by Market Downturn –

But the Cycle Seems to Have Bottomed

Photo: Courtesy Shell

JIM MCCAUL – IMA/WORLD ENERGY REPORTS o question that the market sion leg platforms 10%, production spars budget $23.2 billion in capital spending

Oil Prices Hit Bottom in for new ? oating production 8% and production barges 2%. 19 LNG in 2016 – down 25% from the $31.1 bil-

January and Appear to systems has taken a batter- regasi? cation units and 92 FSOs are also lion spending in 2015 and 45% lower be Recovering 2.

Ning. The past 12 to 18 months in service. No FLNGs are yet in opera- than the peak spending of $42.5 billion

The continuing imbalance of oil de- tion - but this is about to change when mand and supply has weighed on oil pric- have been a dif? cult period for every- in 2013.

one in the business sector. Absence of PFLNG Satu is delivered in April. Over the past two months the picture ing and has caused many oil companies new contracts has forced fabricators and Another 25 oil/gas production units are to cut back on capital spending plans. has brightened a bit and some analysts equipment suppliers to make huge cut- off ? eld and available for redeployment, Brent crude in March 2014 was trading (including this author) see a rebound backs in personnel and spending. But FPSOs account for 76% of the available around $105 per barrel. By March 2015 beginning. By March 21, Brent had re- deepwater production will rebound – oil units, production semis the remaining the price had fallen to around $55 per covered to $41 -- and the futures mar- demand keeps growing – and though the 24%. More than half of these production barrel – and in late March 2016 Brent ket is pricing Brent at $44 at end 2016, signs are mixed we see indications of the units are likely to be scrapped due to age was trading around $40 per barrel. The $49 at end 2018 and $52 at end 2020. rebound starting. and/or market conditions. nadir was on 20 January 2016 when spot While higher than current spot, these fu-

The growth in the number of produc- Brent closed at $26 – a level far below tures prices are still far below the $100+ tion ? oaters in service or available is the breakeven on many oil ? elds. price of Brent just two years ago. But the

Production Floater shown in the accompanying chart. As a result of the oil price collapse, trajectory in oil prices has been upward

Inventory and Current

An additional 55 production ? oaters daily announcements of lower capital since hitting bottom in January and the

Orders 1.

First some numbers about the state of and 7 storage/of? oading units are cur- spending have been common over the futures market has the upward trend con- rently on order. Of these, 53% are FP- past six to 12 months – from majors like tinuing.

the business. 261 oil/gas ? oating produc-

While no one can predict the price of tion units are currently installed on off- SOs, 13% are another type of oil/gas ExxonMobil to smaller upstream players production unit and 35% are LNG lique- oil, we see the worse being over – and shore ? elds. FPSOs represent 64% of the like Premier, Cobalt, others. ExxonMo- faction or regasi? cation units. bil, for example, in March said it will recovery underway. The world produc- installations, production semis 15%, ten- 32 Maritime Reporter & Engineering News • APRIL 2016

MR #4 (26-33).indd 32 4/7/2016 10:34:39 AM