Page 41: of Maritime Logistics Professional Magazine (Q4 2015)

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OFFSHORE OUTLOOK

A couple of consulting companies at the conference tried to say there were a lot more orders coming, but the guys who make a living at it weren’t having any of that.

I see nothing to indicate that 2016 and 2017 will come back great. – Peter Lovie, senior advisor, ? oating systems, Peter M Lovie PE, LLC

The First Cuts Were the Deepest That would portend more layoffs hitting the FPSO market,

Sixteen months into the current pricing collapse, the oil ma- more contract cancellations and more talk about consolidation jors and independents reporting quarterly earnings in October and decommissions in 2016. sang variations on “lower for longer” like canaries in a gold mine, rolling out plans for more cuts and CapEx reductions for Job Hunting Over a Barrel 2016 through 2018, with an emphasis on deep water. “Deep With oil sloshing around between roughly $45-to-$55/bar- water has been decimated,” says Gladney Darroh, President, rel, now is not the best time to be looking for work in the

Piper-Morgan AEI Energy Exploration, Production, Chemi- sluggish FPSO industry, which is barely half what it was last cals and Related Services. year. But neither is it the worst. There are jobs; there is work

Oil and gas-related job losses to date since last July are es- on FPSOs out in the ? eld. “It’s cautious, not all doom and timated at about 200,000, and counting. Layoffs are expected gloom,” says Peters.

to continue, albeit it at a slower pace and with smaller hits, as “The busiest areas we see right now are technical ship and companies continue to focus on their new top priority - cost- vessel management positions and the shipyard,” says Fast- cutting to the bone. Among the discards? Generous bene? ts stream’s Peters, who is also cited postings on the engineer- and perks from the gravy years. ing side – mechanical, electrical, instrumentation – mostly on

While the FPSO sector has not seen the devastating work- the top side. Marine technical assurance people are also in force reductions enacted by the oil majors and service compa- demand. The mid-stream sector is still quite busy. Clients are nies, there are de? nite signs of stress. SBM Offshore, one of still hiring crew, but core crew only. the big three FPSO contractors, has cut at least 1,200. Con- In the hot and messy Brazilian FPSO market, companies tracts are being shortened and canceled. Oil prices will force that are in the production phase need personnel to run and the decommissioning of some FPSOs nearing the end of their life cycle that aren’t pro? table at $50/barrel, says McCaul.

Snapshot: FPSO Outlook 2015/2016 “If you think environmental regulations are tough when you put a vessel out there, it’s doubly tough when you decommis- sion,” notes Darroh.

In terms of new orders being placed, 2015 has turned out to be the worst year ever, with just three orders valued at $1.5 billion versus last year, which saw six orders of signi? cantly higher value in the ? rst half of the year. Given project devel-

Attendees at the late September 16th FPSO World Congress 2015 were asked how low oil prices have affected FPSO contracting and ex- opment cycles, the impact of these few orders will hit home ecution. 45% see fewer opportunities; 35% saw delays in the decision- in 2019. As of 2014, the market stood at 156 active FPSOs making process for new projects; and another 20% saw projects and worldwide, another 41 on order and 16 available for work.

orders being put on hold or frozen.

Market research companies have all issued FPSO and FPS

Most (48%) expect oil prices to reach $50-$60/barrel while 35% are market reports this year, covering 2015-2020, and most see expecting $60-$70/barrel. A majority see the market staying the same new orders and existing work picking up markedly, if not sig- or slowing down in 2016: 40% slow down, 27% no change; 14% strong consolidation, 19% get better.

ni? cantly, next year or the year after. Lovie is skeptical. “A

Top challenges facing the FPSO market?: Only 19% cited oil prices: 37% couple of consulting companies at the conference tried to say on-time delivery; 33% cost control, 30% project execution, engineering there were a lot more orders coming, but the guys who make a and design, 23% competitive market.

living at it, weren’t having any of that. If prices are bouncing

Most projects are at the execution stage (81%) and are comprised of around, “I don’t know why you’d commit as an operator wor- conversions (85%) versus newbuilds. However, most companies (71%) ried about uncertainly. Everyone follows the operators. I see are looking at new builds in the next two to three years.

nothing to indicate that 2016 and 2017 will come back great.”

And the top investment priorities over the next 12 months for vessel con-

Neither, apparently did the attendees at the 16th FPSO tractors?: Design consultancies (81%), asset integrity (75%), engineering services (68%), and topside technologies and EPCs, each at 63%.

World Congress conference in September, who generally ex-

Source: FPSO Network, FPSO World Congress pect things to stay the same or get worse over the next year. www.maritimeprofessional.com | Maritime Professional | 41 34-49 Q4 MP2015.indd 41 11/18/2015 9:44:06 AM