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converted LNG carriers for ? elds offshore Cameroon and

FPSO

Equatorial Guinea. Africa will account for 49% of ? oating liquefaction expenditure over the forecast period. Yet, most of the East African projects – which account for majority of expenditure – are at an early stage.

Eni is expected to make its ? nal investment decision on its $5 billion Coral South liquefaction vessel offshore

Mozambique in 2017. The sustained industry downturn has resulted in substantial delays to capital intensive projects.

This has particularly impacted developments in Australia, with delays to Browse, Scarborough and the Cash-Maple as project developers look to maximize pro? ts for stakeholders.

Conclusions

The oil price collapse will have a signi? cant impact over the forecast period for both the FPS and liquefaction markets, leading to substantially reduced expenditure than previ- ously forecasted. Orders in 2015 were severely affected by the downturn and 2016 has continued this trend – though

Douglas-Westwood does expect improvement in 2H 2016.

This improvement will lead to a growth in orders from projects that have been re-engineered or seen extensive cost cutting. One example is BP’s Mad Dog Phase 2 in the Gulf of

Mexico, initially considered uncommercial at $110/bbl oil, but is expected to be sanctioned by the end of the year – demon- strating the extent to which costs have been reduced in the wake of the oil price collapse. If cost control continues, the

FPS market may emerge as a leaner, re? ned sector. However, this will require operators and manufacturers to remember lessons currently being learned when oil prices recover.

Statoil’s Aasta Hansteen development

Marginal, deepwater and remote ? elds will continue to be – one of the few Spars being built. areas of focus for the exploration and production industry.

Image from Statoil.

Furthermore, FPS units are likely to remain the only option in capital intensive liquefaction projects. Furthermore, the for deepwater oil developments for the foreseeable future and success of the pioneering projects will serve as a yardstick for an attractive proposition for marginal and remote ? elds. Given stakeholder’s con? dence. Douglas-Westwood expects a pause the increasing reliance upon reserves in these areas, we have in investment and the sanctioning of FLNG projects due to the con? dence in the long-term proposition of the FPS sector, market downturn. despite the current risks and disruption that are evident.

Douglas-Westwood forecasts the capex on ? oating liquefac- This year will be a landmark year for the ? oating liquefac- tion projects will be $16.7 billion in 2016-2022, as the tech- tion industry, as the PFLNG-Satu enters commercial produc- nology begins to emerge as a viable solution for gas develop- tion. This will be the ? rst in an early wave of FLNG projects ments, with the ? rst unit of its kind expected to commence before there is a pause in investment due to the currently commercial production in late 2016. This landmark FLNG depressed LNG price. liquefaction project is Petronas’ PFLNG Satu, which will be Despite this, in the decades ahead, natural gas will continue producing from the Kanowit gas ? eld offshore Malaysia. to play an increasingly important role in meeting the world’s

The long-awaited Shell Prelude FLNG unit, which was energy demand. Aside from escalating gas demand, other key sanctioned in 2011, continues to experience further delays factors driving FLNG demand include technological advance- as a result of the complexity of the processing module. This ment, monetization of stranded gas reserves, rising costs for unit is now expected to be in operation by 2018 – barring any the development of onshore terminals, shorter lead times, further delays. relocation ? exibility and lower space requirements. Over the

Other liquefaction vessels currently under construction long-term, massive gas reserves discovered in remote regions and due to start-up before the end of 2018 include Perenco’s such as the East African basin will continue to make the case

GoFLNG, and Exmar’s FLNG. However, Exmar is currently in for FLNG as development solutions. talks with several parties regarding the ? nal deployment of their unit. This is due to the termination of an initial agree- Ben Wilby is an analyst at Douglas- ment with Paci? c Exploration & Production (PEP) to deploy Westwood and the author of the North the unit offshore Colombia. Other projects currently under Sea Decommissioning Market Forecast. In construction but experiencing considerable delays include addition, he has authored Douglas-

Ophir Energy’s Fortuna FLNG (OE: June 2016) and Petronas’ Westwood’s’ Subsea Hardware, FLNG and

Rotan FLNG (PFLNG 2). FPS reports. He holds a BA in history from

Many current FLNG projects have opted for newbuilds, the University of Chichester.

however, the two proposed units in Africa, have opted for

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