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0-99 0-99 0-99 28%28%28%28% 51%51%51% ? oaters’ market continues to be beset by Operating companies are usually units with varying characteristics. This Other challenges around the historic severe project delays and cost overruns, well-shielded from the dif? culties brings dif? culties when redeployment connection with the shipping industry, 008 222008 2009 008 2009 2010 0 2011 2012 012 2013 2014 22015 015 015 2016 22017 which threaten the ability to meet fore- beneath them. Contract terms generally is required and increases the need for highly complex and immature regula- 34% 34% 34% cast demand in the years ahead. Leasing dictate that day rates commence with conversions and re-conversions, often the tion, and the sheer size of the invest- contractors are among the most severely ? rst oil production. When engineering, most challenging engineering, procure- ment required for each new project affected by the status quo, often taking construction, or commissioning delays ment, and construction projects when further burden the supply chain, limiting on considerable project risk that has been occur, they directly impact the contrac- unknown qualities and dif? culties arise capacity and the effectiveness of FPSO outsourced by the ? eld operators. tors’ balance sheets. While frustrated throughout the latter stages of develop- production.

The lessors themselves are in a dif- by the delay to ? rst oil, an indirect cost ment. This has led to cost overruns above As con? dence in leasing continues ? cult position. Recent years have seen at with investors demanding that barrels be the already-high industry average. to grow, these and other serious issues least seven lessors ? le for bankruptcy or brought to market quickly to maximize Complexity in the decision making will need to be addressed if the supply be acquired. At least the same number ? nancial returns, the agreements in place process also challenges FPSO proj- chain and leasing contractors are to meet have seen severe constraints on their are not typically adjusted. ect execution, particularly with the demand over the next ? ve years. capacity to execute new projects while The complexity of offshore produc- increased oversight and engagement of the appetite to take on new projects of tion presents a unique challenge to the ? eld operators (compared to drilling, for Damilola Odufuwa the remaining main players, including FPSO industry. Unlike drillships, the ves- example) who require decisions made at joined Douglas- those mentioned above, is increasingly sels remain in place for extended periods project level and at management level. Westwood as a limited. Simply examining the equity of time and must adjust to substantially The impact of oil company requirements researcher and stakes in North Sea-based FPSO players different subsurface conditions over time. is further exacerbated by the lack of primarily works on shows a dramatic deterioration over the Although FPSO design is engineered in institutional experience when it comes bespoke consultancy/ past six years. precise detail it is based on very lim- to FPSO procurement. Few operators advisory projects, With dependence on offshore and ited knowledge of the ? eld conditions, have completed more than a handful including due deepwater production growing, it is a particularly in areas of extended produc- of projects, each materially different diligence analysis and publications. source of considerable frustration that the tion. As ? ow rates, hydrocarbon mix, and from the last. This limits the build-up of Damilola is the lead author of The World industry continues to face such signi? - other factors become clearer, the premise knowledge and process internal to the Floating Production Market Forecast, cant challenges with no obvious light at for the speci? c designs can be wildly operators, worsened still by the turnover 2014-2018. Odufuwa graduated from the the end of the tunnel. A number of fac- inaccurate, impacting the effectiveness of personnel in the industry. It’s particu- University of Kent with a degree in tors contribute to this situation and each of the vessel. Because each ? eld devel- larly rare to ? nd an FPSO team that has Financial Economics and a master’s present their own challenges as demand opment is unique, one-off designs have executed multiple projects at the same degree in International Finance and marches on. been employed, leading to a ? eet of company. Economic Development.

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