Ability to be Renovated, Modified, And Re-deployed at Reduced Rates to Improve Scope of FPSO Vessels
According to a report published by Transparency Market Research (TMR), the FPSO market is expected to rise from US$15.9 bn in 2014 to reach US$43.4 bn by 2021, expanding at a 16.2% CAGR from 2015 to 2021.
Q. What are the factors challenging the growth of the market?
The FPSO industry is capital intensive in nature and requires high initial investments. Huge financing is required for the construction of a new FPSO. The construction of a single unit costs US$2.5 to US$3.0 bn, whereas the cost of conversion of an oil tanker is between US$1.5 bn to US$2.0 bn. The cost of deployment, testing, and operation is also high. Furthermore, inflation is causing a rise in the cost of labor and materials, which in turn affects the return of investments (ROI) of FPSO operators.
Q. What are the recent developments by key players operating in the global FPSO market?
In February 2015, Hyundai Heavy Industries Co., Ltd finished the construction of GoliatFPSO. The GolaitFPSO is the world’s largest cylindrical FPSO, capable of storing one million barrels of crude oil per day.
In October 2015, SBM Offshore got a front-end engineering and design contract from TechnipS. A. for three large-scale turret mooring systems. These systems need to be designed for implementation in projects for FLNG vessels in Australia. Such developments and contracts are expected to ensure that players continue to grow in the market.
Q. What are the key opportunities in the global FPSO market?
Key opportunities in the market are expected to lie in the conversion of oil tankers, refurbishments, and upgradations of FPSOs. The capability of an FPSO to be renovated, modified, and be re-deployed at reduced rates as compared to a newly built FPSO is expected to make it an attractive and cost-effective solution.
Additionally, it is expected that strategic collaborations among players in different stages of the value chain will prove to be beneficial and crucial for meeting the complex requirements of building advanced FPSOs.
The evolving subsea processing technology enables FPSOs to produce oil from challenging offshore oil reserves, which will ensure its continued demand in the future. Additionally, the rising focus on a standardized approach to FPSO engineering will lead to faster deployments, thus boosting its demand.