Page 14: of Maritime Reporter Magazine (November 2015)

MARKET REPORT

Floating Production Systems

Downturn in the Deepwater Sector: A Bump in the Road or Long-Term Slowing of Growth?

By Jim McCaul, IMA/World Energy Reports

MA/World Energy Reports has just completed a comprehensiveassess- ment of the ? ve year outlook for the

Ideepwater sector. The new report – the 19th annual ? oater market forecast prepared by IMA since 1996 -- provides our forecast of orders for ? oating pro- duction systems between 2016 and 2020.

Here’s an overview of the ? ndings and conclusions in the report.

Bottom Line

We see the downturn in market con- ditions and implosion of Petrobras as a bump in the road. While the outlook is clearly dimmer than last year, there is a large backlog of planned projects requir- ing ? oating production systems – and the long term fundamentals to support investment commitment in these projects remain very solid. But the next 12 to 24 months will test the resilience of ? eld op- erators and contractors in the deepwater supply chain.

The Current Situation

After four decades of rapid growth, the deepwater sector has suddenly stumbled.

Very few orders were placed in 2015 for ? oating production systems. Only 2 FP-

SOs have been ordered since January of this year– compared to 12+ orders annu- ally over the past decade. The downturn in orders re? ects the general unravel- ling in industry conditions. Virtually every company in the supply chain feels threatened by business softness. Capital expenditures are being sliced and deep- water project starts deferred. Personnel reductions are being announced on a dai- ly basis, rig contracts are being cancelled or renegotiated, assets are being written down.

What happened?

Behind the downturn is an imbalance in oil supply and demand brought on by the emergence of shale/tight oil and inability of major producers to coordi-

Photo: iStock 14 Maritime Reporter & Engineering News • NOVEMBER 2015

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