Surge of FPS Orders to Continue into 2018
The latest World Floating Production Systems Tracker, released today by Westwood Global Energy (“Westwood”) forecasts a continuation of the recovery seen in 2017. Following-on from 15 orders in 2017 (2016 saw zero orders), Westwood expects the positive sentiment in the market to continue through 2018 with a further 17 orders expected. This recovery has occurred in part due to an improvement in oil prices and renewed appetite for investment from E&P companies, while the re-engineering of many projects at the front-end engineering stage has also helped to reduce cost.
However, due to a significant number of installations in 2017 and 2018, the backlog of units in build has fallen to 35 (vs a peak of 55 in Jan 2015) and the value of the units in build has fallen by 26% in the last year alone. We therefore expect strong competition in the FPS supply chain as OFS providers look to rebuild backlogs. Pricing pressure is likely to remain absent for the time being as excess capacity is absorbed and the supply chain remains lean. Identifying the upcoming projects early and engaging with the appropriate operators and lease contractors will be critical.
- 61 Orders expected over the 2018-2022 period
- Phased development Capex of $51bn forecast for the next five years
- Latin America accounts for the largest proportion (43%) of the phased Capex. Brazilian activity is returning to the market with two Petrobras orders in 2017 and five expected in 2018.
- Despite the orders in 2017, backlogs are low and competition for new orders is expected to be intense.
FPS Market Coverage:
- NEW – Detailed supply chain review including analysis of leased fleet, FPS owners and major engineering, equipment and service contractors
- Installation Capex forecast by region and type
- Unit installation forecast by region and type.
- Order Capex forecast.
- Summary of new and expected 2018 orders and units onstream.
Analysis is based on Westwood’s Sectors FPS database, which details more than 700 FPS projects that are updated and tracked daily. The World Floating Production Systems Tracker 2018 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.
Please contact Gareth Hector or a member of the OFS Research team for sample pages, Sectors FPS demonstrations or for an informal discussion on the key report conclusions, on:
Direct: 44 1795 594 726