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book shows 51 FPSs in-build at present ? a slight increase compared to last year?s edition of the Douglas-Westwood report. However, over the entire forecast period, the outlook is considered positive with the value of annual installations is pro- jected to grow from $10.2bn in 2013 to $26.2bn in 2017.The E&P industry is mature and needsto access offshore and deepwater re- serves. Energy demand is growing as a function of population and economicgrowth. The upstream E&P business is increasingly reliant on offshore reserves to achieve incremental production as most of the easy-to-access reserves on- shore have already been exploited. Floating production systems are a key enabler for offshore production in deep- waters and for economically-marginal fields. The lingering European sovereign debt crisis presents two significant risks to the sector. First, that projects do not go ahead due to lack of available finance for either the FPS contractor or the operator. Sec- ond, that the crisis will bring further eco-nomic downturns and depress oil demand and prices ? in turn impacting new E&P activity. The technological complexity of field developments is increasing and this will benefit oilfield equipment suppliers. Deeper waters, challenging reservoirs (e.g. very high or low pressure, sour hy- drocarbons, high water content), and age- ing fields will all present problems for operators of FPSs and opportunities forOEMs and engineering firms. Local content requirements are causingdelays in project execution and cost over- runs. The ambition of creating value and employment locally will need to be bal- anced with the need to have an efficient, competitive and competent supply chain. These ambitions may continue to prove to be mutually exclusive. The FPS leasing sector needs a sustain-able business model. Poor financial per- formance from leasing contractors isbeing blamed on taking similar downside risk to operators (e.g. reservoir perform- ance, construction risk, political risk) but without any of the upside that operators are exposed to (e.g. high oil & gas prices and total production being greater thanforecast). Lease contractors need to work with operators to find sustainable con- tractual arrangements for mutual long-term benefit. Political risk has always been present in the E&P business and this is unlikely to change. Boundary disputes, threats ofcivil unrest and war and changes in taxa- tion regimes are all ever-present chal- lenges that the oil and gas industry is well-used to encountering. A ?portfolio approach?, avoiding excessive exposure to a single risk area is likely to continue to be the approach for E&P and oilfield services companies. The medium and long-term outlook ishowever very positive. Douglas-West- wood are confident that the underlying long-term growth drivers will overcome the near-term issues. We are tracking over 200 potential future FPS deployment op- portunities and over the period to 2017 we forecast that 121 installations willoccur, with associated Capex spend dou- bling compared with the previous five year period.This is a complex, dynamic industry that is exiting a period of weakness and is now entering a new up-cycle. DW?s five-year outlook vs. the 2011 edition of our report shows an improvement in mar- ket size of some $23.6 billion ? a 35% uplift. In terms of timing, the next 12 months could present a superb entry op-portunity to FPS-related business sectors. Hannah Lewendonjoined DW as aresearcher after graduating from theUniversity of Southampton with afirst-class degree in Economics andFinance. She has carried out exten-sive research on the floating produc-tion sector and Hannah is the leadauthor of the ?The World Floating Pro- duction Market Forecast 2013-2017?.Report details: Now in its 11th edition, Douglas-Westwood?s World Floating Produc- tion Market Forecast 2013-2017 hasbeen tracking and analysing the in-dustry for over a decade. http://www.douglas- westwood.com/shop/shop in-fopage.php?longref=1048~0#.UH0aOW_A-kMMR#11 (34-41):MR Template 11/3/2012 9:26 AM Page 41