Oil Demand

  • IMA/World Energy Reports has just completed a comprehensiveassessment of the five year outlook for the deepwater sector.  The new report – the 19th annual floater market forecast prepared by IMA since 1996 -- provides our forecast of orders for floating production systems between 2016 and 2020.  Here’s an overview of the findings and conclusions in the report.

    Bottom Line
    We see the downturn in market conditions 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 requiring floating 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 field operators 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 floating production systems.  Only 2 FPSOs have been ordered since January of this year– compared to 12+ orders annually over the past decade.  The downturn in orders reflects the general unravelling in industry conditions.  Virtually every company in the supply chain feels threatened by business softness.  Capital expenditures are being sliced and deepwater project starts deferred. Personnel reductions are being announced on a daily 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 coordinate a ramp-down of global output.A huge oversupply of oil is in the market.  The result has been a plummeting of oil prices over the past year --reducing cash flow and prompting oil companies to severely cut back on capital expenditures to conserve cash.
    Add to this the implosion within Petrobras.  The major player in the deepwater sector has been largely taken off the field by a corruption scandal.  More than a third of expected FPSO orders over the next five years were to be generated by Petrobras.  But the company’s financial problems have caused a massive cut back in planned project starts.  In 2014 Petrobras was planning to acquire13 additionalFPSOs for project starts between 2018/20.  Now it is planning to acquire 5 FPSOs – and questions remain about the ability to finance even this reduced number of FPSOs.

    Is a Rebound Likely?
    Absolutely.  Clearly there will be a rebound in the deepwater sector.  It will be driven by increasing global oil demand and need to find new sources of oil to replace depleting sources. Global oil demand has been growing at an average rate of 1.4% annually over the past 20 years.With the exception of two years during the global financial meltdown, oil demand has increased year over year during this period.
    Looking forward, industry analysts differ on the rate of future oil demand growth, but not on whether growth will continue.  For example, the IEA sees world oil demand in 2040 growing to 104 mb/d, an increase of 10 mb/d over current consumption. The EIA predicts global oil/liquid fuel consumption will grow to 119 mb/d by 2040, a 30% increaseover the present. OPEC expects oil demand to grow to 111 mb/d in 2040, up 18% from global oil consumption in 2015.
    Among the oil majors, ExxonMobil expects an average growth of 1.2% in oil demand through 2025, followed by a 0.5% growth between 2025 and 2040. BP calls for world oil demand to grow at an average rate of 0.8% annually through 2035. Ultimately new oil sources will be needed to accommodate this demand growth – as well as replace supply losses as depleting oil fields come off line.  Deepwater is among those new sources.

    What Will Drive the Rebound?

    We are tracking more than 240 offshore oil and gas projects in the planning stage that likely require a floating production system for development.Some of these projects will require multiple systems. If all projects proceed to development, up to 275 new production floaters will be required over the next 10 to 15 years. A large backlog of eligible projects is significant – but only part of the picture in forecasting future production floater orders.  Ultimately an investment decision is needed to transform these deepwater project opportunities into contracts for floating production facilities. In our forecast report we examine eleven underlying business drivers that will influence the timing and direction of future deepwater project investment decisions.  Here’s how we see these eleven drivers at the moment.

    In the positive category are
    •    Oil and gas demand keeps growing
    •    Supply disruption potential keeps the focus on finding new sources of supply
    •    Long term oil/gas prices will rise, driven by demand/supply fundamentals

    In the negative category are

    •    Near term oil and gas prices have fallen to levels that discourage investment
    •    Major energy companies have been cutting back on capital expenditures
    •    More supply has suddenly come into the oil and gas market
    •    Shale/tight oil and gas projects are competing for investment funds
    •    Local content constraints in the supply chain are creating delays and overruns
    •    Petrobras, the major customer, is having serious financial problems
    •    Cost of capital for deepwater projects will rise over the next several years

    In the unknown category are

    •    Black swan events can (and have) disrupt the sector

    Interaction of these drivers over the next few years will determine the number and timing of future production floater orders.
     

    Forecast for Orders

    In the most likely scenario, over the next five years we expect orders for 64 oil/gas production units (FPSOs, Semis, Spars and TLPs), 29 LNG processing units (FLNGs, FSRUs) and 25 storage/offloading units (FSOs).  Capex associated with the building and conversion contracts will be in the vicinity of $106 billion.  A breakdown of the forecast by size unit, region, year order placed, new or modified hull, etc. is provided in the new report.
    In the high scenario we anticipate a considerably stronger pace of orders.   Here we expect orders for 77 oil/gas production floaters, 36 LNG processing units and 30 storage/offloading units.  In the low scenario the number of orders is expected to be 45 oil/gas production floaters, 22 LNG processing units and 20 storage/offloading units.
    The 2016/20 forecast is significantly lower than the five year forecast last year.  There we projected orders for 98 oil/gas production units, 25 LNG processing units and 30 storage/offloading units.  . 
    Details for the production floater forecast are provided in our new 186 page report.  Information about the report, including the table of contents and list of exhibits, is available at

    www.worldenergyreports.com

     

    (As published in the November 2015 edition of Maritime Reporter & Engineering News - http://magazines.marinelink.com/Magazines/MaritimeReporter)


     

  • from a number of new studies on oil, gas and renewable energy published by his firm, Westwood said, "Any growth in global economic activity increases oil demand such that at 1% demand growth a production peak occurs in 2016. at 2% it occurs in 2012, and at 3% it occurs in 2008. "The world's known and

  • spending budgets and deepwater drillers are not quite as bullish as in recent past.  Growing Demand for Oil and Gas On the positive side, global oil demand has grown at an average rate of 1.4% annually over the past 20 years.  With the exception of two years during the global financial meltdown, oil

  • 2000. The Drivers Oil market fundamentals continue to strengthen. The outlook for world economic growth continues to be good, forecasts call for oil demand to increase and the oil producers appear to have engineered a soft landing for oil prices. According to the IMF, the world economy in 2000 will

  • tonnage. The accelerated phase-out of 12 percent of the world tanker fleet over the next two years coupled with the forecasted increase in global oil demand should offset the current tanker orderbook. As a result, we expect the current tight balance between tanker supply and demand to continue during

  • as well as low natural gas prices, and thus lack of natural gas for oil substitution, resulted in an additional reduction of about 0.9 million bpd in oil demand compared to the same period a year ago." Scrapping activity has recently picked up and is presently at a 30,000,000 dwt annualized rate. While

  • down. In the latest Oil Market Report dated May 11, 2001 from the International Energy Agcncy (IEA), the organization notes that first quarter 2001 oil demand appears to have fallen short of expectations by more than a half million barrels of oil per day, yet still grew at 1.1 mb/d. Meanwhile, world oil

  • will be around for a long time. Over the longer term, measured in decades, the Class Society DNV GL, in its 2018 Energy Transition Outlook, says that: “Oil demand will peak in the 2020s and natural gas will take over as the biggest energy source in 2026.” They added, “Existing fields will deplete at a faster

  • marine business in the GOM region is a prosperous one. While a recent (May 11, 2001) report from the International Energy Agency notes that global oil demand has dipped in recent months, a look at the big picture shows that global oil demand has grown from 74.8 million barrels per day in 1999 to 76

  • , geopolitical factors and U.S. oil infrastructure issues aside, abundant shale oil supplies in the near term and the impact of energy transition on oil demand in the medium-to-long term will likely serve as constraints on drilling a substantial number of new offshore wells.Given these structural shifts

  • drivers for deepwater development point toward continued sector growth. Spot and futures crude pricing is at levels supporting deepwater development. Oil demand keeps growing and there continues to be need for new future sources of oil. The threat of supply disruption from traditional sources remains, prompting

  • industry afloat, collectively they assess   Swedbank’s chief economist, Harald Andreassen, isn’t “too hopeful” about the long-term prospects for the oil price, but then again, “I’m less certain of this than I’ve ever been as an economist,” he told a floating production conference in Oslo. After two-and-half

  • MR Nov-19#83  cost-saving advan- ous offshore oil installations.  All equip-
)
    November 2019 - Maritime Reporter and Engineering News page: 83

    .S. Navy, NOAA, and vari- MacGregor, part of Cargotec, com- pleted the construction of FibreTrac, the the most signi? cant cost-saving advan- ous offshore oil installations. All equip- ? rst ? ber-rope offshore crane to enter the tages seen in decades. FibreTrac is able ment is manufactured in the U.S

  • MR Nov-19#81  sponsor, 
The very large crude oil carrier (VLCC) 
The submarine)
    November 2019 - Maritime Reporter and Engineering News page: 81

    former Second Lady of Scrubber Delivered tric Boat. More than 10,000 shipbuilders from the United States and the ship’s sponsor, The very large crude oil carrier (VLCC) The submarine is the second ship to be Newport News and Electric Boat have during a ceremony in October 2018. Tanzawa, the ? rst

  • MR Nov-19#80  Nigeria’s coastal and offshore oil  of Homeland’s clients)
    November 2019 - Maritime Reporter and Engineering News page: 80

    nm in and ity and cost effectiveness to the bene? t pair of FCS 3307 high-spec include Damen’s trademark Axe Bow around Nigeria’s coastal and offshore oil of Homeland’s clients. The decks allow patrol vessels to be operated hull form that is designed to deliver ex- ? elds. The security packages installed

  • MR Nov-19#79 , 35 knot vessel fea-
Fuel Oil  4914 gallons / 18 600)
    November 2019 - Maritime Reporter and Engineering News page: 79

    14 ft./4.25 m sel built for the operator by Richardson Devine Construction Marine grade aluminium Marine. The 500-passenger, 35 knot vessel fea- Fuel Oil 4914 gallons / 18 600 liters tures the operator’s trademark parallel boarding Fuel Oil (Day tanks) 1057 gallons / 4 000 liters system, whereby ?

  • MR Nov-19#78  Sovcom?  ot to transport crude 
oil for the Novy Port project)
    November 2019 - Maritime Reporter and Engineering News page: 78

    Laza- rev, a prominent Russian admiral and explorer known for his discovery of Antarctica. The tanker was ordered by Sovcom? ot to transport crude oil for the Novy Port project, under a long-term agreement between Sovcom? ot and Gazprom Neft. The ceremony was attended by Oleg Melnikov, Vice-Gov- ernor

  • MR Nov-19#75  gas. Consisting 
ADL 40 engine oil for Color Hybrid, Color)
    November 2019 - Maritime Reporter and Engineering News page: 75

    Plug-In Hybrid for CEMS applications where condensed wa- ExxonMobil is supplying Mobilgard ter is not present in the ? ue gas. Consisting ADL 40 engine oil for Color Hybrid, Color of a stack-mounted probe and separate con- Line’s latest addition to its ? eet of ferries. trol unit, 4650-PM’s forward scattering

  • MR Nov-19#74 E
EMISSION REDUCTION TECH FILES
Schottel Propulsion for)
    November 2019 - Maritime Reporter and Engineering News page: 74

    E EMISSION REDUCTION TECH FILES Schottel Propulsion for Emission-Free Push Boat The agreement between Wärtsilä and Norsepower will pro- mote the use of Rotor Sails & support sustainable shipping. Wärtsilä, Norsepower Sign Agreement The technology group Wärtsilä and Norsepower, a provider of low maintenance

  • MR Nov-19#72  were lower 
low sulfur fuel oil (LSFO), but this will )
    November 2019 - Maritime Reporter and Engineering News page: 72

    are switching to more expensive than HSFO, the poten- levels of re? ning required for LSFO and While the car’s emissions were lower low sulfur fuel oil (LSFO), but this will tial savings (i.e. savings gained from other distillates (such an upgrade would in GHGs, once the full production pro- mean

  • MR Nov-19#71  company that is 
part of an oil company, our pri-
mary)
    November 2019 - Maritime Reporter and Engineering News page: 71

    S SHIPMANAGEMENT FLAG “As a shipping company that is part of an oil company, our pri- mary role is managing marine risk, our secondary role is trans- porting oil.” Steve Herron, GM of Fleet Operations, Chevron Shipping Photo: Chevron and develop. A certain trust has devel- tal regulations adopted by the

  • MR Nov-19#70   The business of transporting oil for  national Maritime)
    November 2019 - Maritime Reporter and Engineering News page: 70

    ron Shipping. shaping global regulations at the Inter- Cand more, shipowners are de- ping companies make decisions that lead The business of transporting oil for national Maritime Organization (IMO), manding high levels of standards from to long-term success. Low taxes and low Chevron is not motivated

  • MR Nov-19#68  is a growing  dustry is a well-oiled machine, and it is  an)
    November 2019 - Maritime Reporter and Engineering News page: 68

    in- that her organization grows in step with installed, it an issue that everyone is fo- ber of early adopters, there is a growing dustry is a well-oiled machine, and it is an ever-changing industry. “I love being cused on.” reference list, particularly coming out also very adaptable. So if there

  • MR Nov-19#64 VOICES NICK BROWN, DIRECTOR OF MARINE AND OFFSHORE,)
    November 2019 - Maritime Reporter and Engineering News page: 64

    VOICES NICK BROWN, DIRECTOR OF MARINE AND OFFSHORE, LLOYD’S REGISTER 5 minutes with LR’s Nick Brown By Greg Trauthwein “LR research suggests that the cheap- est zero carbon fuels are going to be at least double the price of fuels today.” Nick Brown, Lloyd’s Register Photo: Lloyd’s Register To kick things

  • MR Nov-19#62  the  ‘Swiss army knife’ for the oil industry  The slip joint)
    November 2019 - Maritime Reporter and Engineering News page: 62

    lift vessel (launched as a kind of positioning. leading the ELICAN consortium which ening, as well as modi? cations to the ‘Swiss army knife’ for the oil industry The slip joint connection was designed has designed and installed a 5MW pro- tank arrangement to enhance the proba- during its boom in 2013)

  • MR Nov-19#61 OFFSHORE WIND THE INSTALLATION FLEET
110MW Changhua wind)
    November 2019 - Maritime Reporter and Engineering News page: 61

    OFFSHORE WIND THE INSTALLATION FLEET 110MW Changhua wind farm in 2020. Both wind farms are currently under construction.” Esteyo’s ELICAN Seajacks concept. UK-based Seajacks has been operating in the off- Source: ALE shore wind business since 2006. Since then, it’s built the Kraken, Leviathan, Hydra

  • MR Nov-19#46  in key strategic areas, such as oil  The Coast Guard’s icebreaking)
    November 2019 - Maritime Reporter and Engineering News page: 46

    every Arctic Urgent requirement provider and operator of the U.S. polar ral resources there,” said Coast Guard nation in key strategic areas, such as oil The Coast Guard’s icebreaking ? eet capable ? eet but currently does not have Vice Commandant Adm. Robert Ray, and gas development, ports, railways

  • MR Nov-19#45  land  in extracting minerals, oil and gas.  Sea- “As the)
    November 2019 - Maritime Reporter and Engineering News page: 45

    , and the military, as well as interest icebreaker. communications, and comprehensive eight countries that have territorial land in extracting minerals, oil and gas. Sea- “As the region continues to open and Maritime Domain Awareness. In order to or seas above the Arctic Circle or in the food is a multi-billi

  • MR Nov-19#37  to another level. 
transfer oil across the interface between)
    November 2019 - Maritime Reporter and Engineering News page: 37

    , you have to circulate heat It’s kind of like Subchapter M. Early on we identi? ed was a lot of potential to take those to another level. transfer oil across the interface between the barge and our gaps and started to address them to make an easier the tug. I worked with a naval architect to help

  • MR Nov-19#36  I was the Damage Control As-
oil storage depot in New York)
    November 2019 - Maritime Reporter and Engineering News page: 36

    started in the energy industry at 16 working at an The company that I was running was bought by Hous- When I left the vessel I was the Damage Control As- oil storage depot in New York Harbor, working there ton Marine Services, so we moved from the Port Ar- sistant, which was normally an engineering function

  • MR Nov-19#32  dayrates. The marketed 
older oil service vessels in the)
    November 2019 - Maritime Reporter and Engineering News page: 32

    Financiers also note the overhang of commodations with its lenders. Its daily region for jack-ups again.” utilization and dayrates. The marketed older oil service vessels in the market- business will continue while discussions Privately held Edison Chouest, ac- utilization for both jackups and ? oaters

  • MR Nov-19#30 . 
he fate of Offshore Service  oil, slightly higher (with)
    November 2019 - Maritime Reporter and Engineering News page: 30

    WORKBOATS THE OSV MARKET CAROLYN CHOUEST: Edison Chouest vessel working Paci? c waters. he fate of Offshore Service oil, slightly higher (with temporary (but slight) jit- for an uptick in 2020 and 2021 with Photos: Iain Cameron Vessels (OSVs) is, natural- nearby at around $60/ ters as an Iranian

  • MR Nov-19#29  
 
is Up?
The environment in oil patches onshore 
and offshore)
    November 2019 - Maritime Reporter and Engineering News page: 29

    WORKBOATS THE OSV MARKET OSV Market Which way is Up? The environment in oil patches onshore and offshore alike has been challenging throughout 2019; worries about an eco- nomic slowdown – whether cyclical or in- duced by a trade war – have weighed heav- ily on oil prices, even in the face of reduced

  • MR Nov-19#26  interest at Bra- name from Statoil to Equinor last year. )
    November 2019 - Maritime Reporter and Engineering News page: 26

    change of the company´s Margareth. Equinor is working system- constant offshore winds present off the IOCs have looked with interest at Bra- name from Statoil to Equinor last year. atically in bettering its energy ef? ciency, coasts of north and northeast Brazil will zil’s clean energy market in search

  • MR Nov-19#15  and/or drafting/
the Louisiana Oil?  eld Anti-Indemnity  tion)
    November 2019 - Maritime Reporter and Engineering News page: 15

    such agreements are ties can work around the package limita- in the candy bowl meant the venue had in contract negotiation and/or drafting/ the Louisiana Oil? eld Anti-Indemnity tion either by (a) de? ning a package and not read the contract, and there would be reviewing the same can and often does Act

  • MN Nov-19#95  Clarke holds  ocean pollution – oil leaked from con-
2019,)
    November 2019 - Marine News page: 95

    growing shipbuilding and work in eliminating a major cause of On Thursday October 17, ship repair operations. Clarke holds ocean pollution – oil leaked from con- 2019, Congressman Elijah E. a Bachelor of Arts degree in econom- ventional oil lubricated tailshafts – has Cummings (MD-07) passed