Page 34: of Maritime Reporter Magazine (April 2016)

? ow daily about the company – and the

FSRU Contracts Have

Brazilian economy.

Been the Bright Light

The impact of this implosion on the 5.

Over the Past Year ? oating production sector has been huge.

FSRU contracts have been the bright

Petrobras is the biggest player in the sec- light in the ? oating production sector. tor. It has more than 50 ? oating produc-

Five contracts or term sheets for ? oat- tion units (mostly FPSOs) at various ing regas units have been signed over stages of planning. No other operator the past year. However, some pending comes close to this projected procure- contracts for FSRUs are proving hard to ment level.

tie down. The price of LNG has fallen

At the moment it appears that the signi? cantly – which should provide

Petrobras situation is not going to be incentive to switch to natural gas and resolved anytime soon. The political generate requirements for regasi? cation situation in Brazil is deteriorating and no stacles. One unit, the almost completed investment decision. In the same month terminals. But the price of fuel oil has one seems to be able to bring closure to Exmar Caribbean LNG barge, is without the Indonesian government rejected In- fallen as well – reducing budget pressure the corruption investigation. Resolution a ? eld as a result of the ? eld operator’s pex’ plan to use an FLNG on the Abadi on power plant managers to switch to could extent into 2017 – maybe later. decision to terminate the LNG project in ? eld – saying a land based LNG plant is cheaper fuels.

Colombia. The other unit, PFLNG Dua required.

Meanwhile Petrobras will be a weak-

Then there is the dif? culty of ? nancing ened player and its ability to invest in under construction in Korea, has been Earlier, in mid-Feb 2016 Hoegh an-

FSRU projects. An FSRU moored off- nounced it was terminating its FLNG shore can require $500+ million invest- new production ? oaters will be severely “re-phased” by Petronas to curtail capi- tal expenditures – and construction will projects -- and took a $37 million im- constrained. ment in infrastructure. This can be hard likely be suspended once the hull is ? n- pairment charge against its FLNG assets. to ? nance. Unlike FPSO and other oil/

Hoegh joins Excelerate in exiting the gas export projects, an FSRU feeds gas ished.

FLNG Contracts Have

Several planned FLNG projects have FLNG sector. Excelerate in Sept 2015 to a local off-taker. The ability to ? nance

Been Impacted by the also run into barriers. In March 2016 decided to cancel its planned project to such deals is limited by the creditability 4.

LNG Glut

Woodside decided to shelve its plan to create an FLNG terminal in Texas, say-

The FLNG market is looking a bit weak of the off-taker and the willingness/ca- as a result of the LNG supply glut that use an FLNG to produce the Browse ing the project is not viable under current pability of the government to provide a has developed over the past year. Two gas complex offshore Australia – saying market conditions. sovereign guarantee. market conditions did not warrant the

FLNGs under construction have hit ob- Overall, we see the FSRU market con- tinuing to be strong – but given the ? - nancial barriers to these projects, closing deals will require patience and ? nancial creativity.

Forecast of

Production Floater 6.

Orders

Looking forward, 242 ? oating pro- duction projects are in various stages of planning. Of these projects, 59% likely involve an FPSO, 10% another type of oil/gas production ? oater, 24% a lique- faction/regasi? cation ? oater and 7% a storage/of? oading ? oater. 44% of the projects are at stage of planning where a production/storage system contract is possible within the next ? ve years – provided the underlying markets drivers support the investment decision.

But obviously the underlying driv- ers need to improve before investment activity rebounds and planned projects turn into orders for ? oating production systems.

Until there is improvement in oil pric- es, ? eld operators will be reluctant to in- vest in new production equipment.

In late March we examined the proj- ects in the planning stage to identify those likely to reach an investment deci- 34 Maritime Reporter & Engineering News • APRIL 2016

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