The floating production storage and offloading vessel market is expected to be resilient over the next four years, according to consultants Energy Maritime Associates (EMA).
Speaking at the OSEA conference in Singapore, EMA managing director David Boggs said the FPSO market was back on strong footing, with the recovery expected to continue through to 2022.
EMA said about 11 FPSO awards have been placed so far in 2018 after a lull in the floating production market that lasted for two years.
Boggs believes there could be a pick-up in FPSO awards next year, with between 12 and 15 awards likely to be placed by various oil majors.
Under EMA's high-case scenario, it predicts between 13 and 17 FPSO awards could take place each year up until 2022, assuming an oil price of between $70 to $90 per barrel.
It has also given a prediction for a mid-case scenario which estimates between 10 and 12 FPSOs being ordered globally, at an oil price of between $50 and $70 a barrel, while its less likely low case scenario estimates seven orders annually at an oil price of $30 to $50 a barrel.
EMA sees strong FPSO demand until 2022 in the high case scenario but it has cautioned capacity constraints and rising costs could limit orders after a two-to-three-year period.
It is also assuming strong global economic growth and energy demand when arriving at the estimates for the FPSOs that are likely to be ordered over the next few years.
Boggs also added that EMA sees a shift towards the FPSO new-build market.
“We are seeing quite a shift towards new-building units that are likely to be almost 40% of the FPSO market” Boggs said.
Brazil is expected to continue to lead FPSO demand globally and the number of floaters to be ordered by state-owned giant Petrobras will play a crucial role in determining the global demand for the units.
Boggs said that FPSO awards by Petrobras resumed in 2017 after a two-year pause, and EMA is hopeful the state-controlled giant will place orders for two-to-four units each year until 2022 in the highest case scenario.
However, Boggs added Petrobras remains a key uncertainty and EMA’s low case scenario sees the Brazilian giant only ordering one or two FPSOs annually if oil prices remain low.