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40Maritime Reporter & Engineering News larly where an existing unit can be reno- vated, modified and redeployed at a sig- nificantly lower cost than a newbuild. Supply-side ConsiderationsThree main factors will affect the sup- ply of units in the FPS sector:Financing Local content Leasing Financing remains a challenge for leas-ing contractors and smaller E&P compa-nies as a result of the debt crisis in Eu-rope. At the same time local content requirements are pushing up prices andextending lead times, particularly in Brazil.For the oil company field operator, FPS ownership becomes the more cost-effec- tive option where production extends over a long period. Alternatively, the de- cision to lease an FPS can be seen as atrade-off between the lower up-front Capex and the increased Opex as a result of the leasing charges. However, leasing also brings advantages in terms of the cost of field abandonment (Abex). The top three leasing contractors areBW Offshore, MODEC and SBM Off- shore, which collectively account for 34% of the leased fleet. The FPSO leas- ing sector remains weak with 85% utili-sation at present compared to 89% at thetime of the 2011 edition of this report.Contractors are reporting poor returns onexisting projects and write-downs on new projects due to cost over-runs. ConclusionsThe FPS sector recovery, following the 2008/2009 downturn, continues steadily. A total of 25 units were ordered in 2011vs. 24 in 2010. We note that orders in 2012 are 13 units as of September, sug- gesting that this year is unlikely to show spectacular improvement without a surge of orders in Q4. Analysis of the order OFFSHORE MARKET REPORTFigure 1 Global FPS Installation Capex by Region 2008-2017 (Source: Douglas-Westwood) MR#11 (34-41):MR Template 11/5/2012 11:04 AM Page 40