Energy Maritime Associates (EMA) confirms in its fourth-quarter 2016 Floating Production Systems Report that the industry has experienced a rough year.

“Unless there is a sudden surge of awards in the next two months, 2016 will be the worst year ever for the floating production market,” EMA’s Managing Director David Boggs said in a statement. “We expect improvement next year as companies are reassured by more stable oil prices and take advantage of lower costs.”

Boggs said record low drilling rates could create a window of opportunity for deepwater and marginal fields, along with the reuse of available assets that can enable cost-efficient production.

“However, this situation will not last forever,” he added. “Companies that take FID [final investment decisions] sooner will benefit from availability and reduced costs throughout the supply chain.”

EMA’s review of third-quarter 2016 included:

  • Two more floating storage regasification unit (FSRU) awards: These two bring the total for the year to four—all FSRUs. Three were for speculative newbuilt units, and the other was deployment of the LNG Regas Vessel Excelerate for FSRU service in Abu Dhabi;
  • $230 million floating, storage and offloading (FSO) contract awarded by Chevron: MISC will convert an FSO unit to replace the Benchamas Explorer, which has been operating in Thailand since 1999; and
  • Three units delivered: Petrofac’s FPF-1 semisubmersible unit, Bumi Armada’s LNG Mediterrana LNG FSO unit and Uzma’s Marsya mobile offshore production unit (MOPU).

Two issues led EMA to ponder whether a floating production and storage vessel (FPS) market recovery was in the offing:

  1. Petrobras has resumed FPSO orders, with seven awards planned by 2018. After a two-year pause, Petrobras plans to lease large FPSO units for the Libra Pilot and Sepia (tenders underway), Buzios V, Marlim Revitalization I and II, Libra 2, and Parque das Baleias developments; and
  2. EMA has identified 10 possible awards that could still be granted in 2016. However, most will be deferred into 2017 as oil companies continue to push back spending. The most likely upcoming awards have a combined capex of $6.35 billion: Coral FLNG (Mozambique), Ophir FPSO (Malaysia), Yombo FPSO (Congo), and Ca Rong Do FPSO and tension-leg platform (Vietnam).

EMA also turned its attention to idle units and the possibilities for their redeployment. Forty-six FPS units are available: 24 FPSO units, 10 production semisubmersible units, six FSO units, five MOPUs and one floating LNG. This is up from 26 at the beginning of the year.

Plus, finding new employment is not easy. While some of these assets will be put back in service, the majority will likely be recycled, like the FPSO Falcon. This FPSO unit was first of three “generic” West African FPSO units ordered by Exxon, which were designed for a wide range of field properties, weather conditions and water depths. Despite these features, the FPSO Falcon was never redeployed.

Details of EMA’s research are included in the 275-page Q4 2016 Floating Production Report. The upcoming Floating Production Market Outlook Report 2017-2021 provides a complete assessment and forecast for each type of FPS. This report will be released in early January.

Turkey Looks To FSRUs To Bolster Gas System

The BOTAŞ Pipeline Corp. aims to use FSRUs as part of its plan to expand Turkey’s energy supplies and diversify its gas sources, the Hurriyet Daily News reported.

The newspaper identified two FSRU projects in the eastern Mediterranean Sea—one on the southern coast of Turkey and one in the Gulf of Saros off the Gallipoli Peninsula in northwestern Turkey. Construction on those projects is expected to be completed in 2019 and result in total capacity of about 40 Mcm/d.

The FSRUs are part of BOTAŞ’s greater goal of increasing daily capacity of Turkey’s natural gas system from the current 200 MMcm/d to 350 MMcm/d (7 Bcf/d to 12.3 Bcf/d), according to data released by the government.
Figures reveal that the company currently imports 42 MMcm/d (1.4 Bcf/d) from Russia’s West Line and 47.3 MMcm/d (1.6 Bcf/d) via the Blue Stream from Russia. The country also buys 19 MMcm/d (670 MMcf/d) of gas from Azerbaijan and 28.5 MMcm/d (1 Bcf/d) from Iran.
Turkey has made clear its goal to reduce its dependence on energy imports and increase its reliance on domestic resources. The country’s energy imports through September 2016 totaled $19.5 billion, according to the Turkish Statistical Institute (Turkstat). Last year, with low oil prices, Turkey’s energy import bill totaled $38 billion compared to $55 billion in 2014.

—Joseph Markman

Offshore