FPS Market Improvement to Continue as Forecast Expenditure and Orders Increase
The World Floating Production Systems Tracker Q2 2017 (previously the World Floating Production Systems Market Forecast) is now available. The report is a concise 20 page update document presenting Douglas-Westwood’s (DW) latest view on the market. Capex for both installations and orders has increased from the Q1 edition, reaching $54bn and $42bn respectively, driven by increased confidence that the bottom has been reached.
- Installation Capex forecast by region and type
- Unit Installation forecast by region and type
- Order Capex Forecast
- Oil Price Sensitivity Analysis
- Comparison between reports – highlighting major news stories of the quarter
- Summary of new and expected 2017 orders and units onstream
- A significant number of units remain in-build, the vast majority of which were ordered prior to the downturn. These will be installed in the coming years, with associated Capex remaining high whilst the backlog is worked through.
- Analysis of the order book shows 36 units in-build at present – a decline from the previous edition. This is due to the lack of project sanctioning in 2015 and 2016.
- This is already changing and expected order value over the forecast have increased 14% from Q1 as confidence returns to the sector.
- Installation expenditure over the forecast has increased 7% to $54bn. This is a result of additional installations expected over the forecast.
- Latin America will remain dominant in the sector with 31% of both Capex and installations. The majority of expenditure will be for Petrobras fields in water depths >1,000m.
- Installation expenditure will be diverse with Africa, Asia, North America and Western Europe all forecast to have installed spend over $5bn.
- 2017 will see the highest installation expenditure (43% of forecast) driven by units ordered before the downturn.
Over the last quarter DW has witnessed an increased enthusiasm for field development activity as operators seek to capitalise on lower supplier prices and replace reserves. Significant project revisions have brought the cost of many FPS developments down substantially and projects previously considered uncommercial such as Rosebank and Bonga South-West are now progressing towards sanctioning. This demonstrates a renewed confidence in the use of FPS units in both deepwater development (where they remain essential) and in shallow water where they are seen as a viable alternative to fixed developments.
Analysis is based on DW’s SECTORS database which details more than 700 FPS projects that are updated and tracked daily. The World Floating Production Systems Tracker Q2 2017 is essential for anyone evaluating investment opportunities in the FPS sector, including growing firms seeking competitive advantage across segments, investment banks and advisory firms wanting to improve their understanding of the business and industry analysts seeking a competitive edge.
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