Illustration; Source: Energy Maritime Associates (EMA)

‘Large’ orders for floating production systems coming soon

Following a whirlwind of activity in the first half of 2023 with six floating production, storage, and offloading (FPSO) awards in the bag, the pace has simmered down with almost no major awards. However, things are about to take a turn for the better once again, as the floating production systems construction market remains a key bright spot in the offshore marketplace, according to Energy Maritime Associates (EMA), a provider of data, analysis, and advisory services, tracking floating energy production trends across the globe.

Illustration; Source: Energy Maritime Associates (EMA)

EMA highlights that the pause in large floating production orders continued in 1Q 2024 as companies adjusted to new pricing realities and the supply chain worked through the backlog of orders placed in 2021-2022. While Petrobras has tenders in progress for six FPSOs, the Brazilian state-owned energy giant did not place any orders last year, representing the first time this has happened since 2016.

Furthermore, the only large order in 2024 was for Cedar LNG in Canada, said to be the first floating liquefied natural gas (FLNG) facility in North America. This order entailed $1.5 billion for Samsung and $800 million for Black & Veach. Once March 2024 rolled in, Karmol placed an order with Seatrium for three FSRU conversions, with an option for a fourth unit.

Based on Energy Maritime Associates’ new report, there had been a similar slowdown in offshore drilling contracting in late 2023. The activity has resumed with recent awards for deepwater rigs now eclipsing $500,000/day.

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Moreover, Energy Maritime Associates’ report underlines that there are 184 floating production projects in the planning pipeline; 51 production floaters and 6 storage floaters currently on order; 24 units available, including 14 FPSOs, 4 semi-submersibles, 2 FSOs, 2 FSRUs, 1 barge, and 1 SPAR; 339 production floaters and 114 storage floaters currently in service/available; and 410 production floaters, 190 storage floaters, and 24 MOPUs delivered or redeployed since 1996.

David Boggs, EMA’s Managing Director, commented: “While there has been a slowdown in orders over the past 12 months, the fundamentals of the floating production sector remain strong. There is a long queue of developments progressing toward sanction. Cost escalation and limited contracting capacity have contributed to delays in reaching FID.

“There was a similar pause in the deepwater drilling market in 2H 2023, which seems to be over with rates reaching new highs. We expect multiple awards of large floating production units, including massive FPSOs for Petrobras, in the next few months.”   

As a result of the current market fundamentals, EMA still expects significant orders for floating production units later in the year, including multiple FPSOs for Petrobras in Brazil, new frontier regions in South America, and mature areas in West Africa like Angola and the Ivory Coast.