There have been no floating production awards made in the past nine months, according to Energy Maritime Associates (EMA) second-quarter 2016 Floating Production Systems Report.

The last orders for production units were placed in July 2015: Shell’s Appomattox (SEN, 32/22) semisubmersible unit, Golar’s third speculative floating LNG unit (FLNG) and Golar’s fourth speculative floating, storage regasification unit (FSRU).

Some 11 units have been delivered in the second quarter: five FPSO units, two tension-leg platforms, three oil floating storage and offloading units (FSOs), and one LNG FSO.

EMA said production of eight offshore fields has been or will be stopped in 2016. Four of these fields are being shut in earlier than expected and involve the Armada Claire, Petrojarl Varg, OSX 3, and Aoka Mizu FPSO units. Termination for two of these FPSO units is without compensation, which is rare. Bumi Armada is disputing Woodside’s termination of the Armada Claire, which was being leased through 2018.

EMA also said that the backlog of orders is decreasing for the first time since 2013. The order book had been relatively stable at 62 to 65 units since fourth-quarter 2013, but dropped by 11% in first-quarter 2016. Declines are expected to continue as deliveries outpace orders. There are 18 deliveries scheduled by year-end 2016, but a few might be delayed.

“By 2017, we expect the backlog to drop below 40 units, a level last seen in the 2009 downturn,” EMA added.

Some 35 units are now idle without contracts—24 FPSO units, seven production semisubmersible units, three FSOs and one mobile offshore production unit (MOPU). Many of these units will eventually be scrapped, while a few might be redeployed as early production systems or on short- to medium-term contracts on marginal fields.

EMA has identified 27 floating production units most likely to be removed from service over the next 12 to 20 months. These units are roughly split between leased and owned units with one-third of them operating in the North Sea. There are 14 units that have been in service more than 15 years and are likely to be scrapped. Plus, 12 of the units have been in service less than 10 years and many of these units will be laid up while seeking new contracts.

EMA said the sector will be in survival mode for 2016. It believes there will not be much activity this year, and what little activity there is will only occur towards the end of the year.

EMA has identified 28 projects with the highest chances of award by 2017. FPSO units account for more than half of the possible projects, with FLNG, FSRU, semisubmersible units, TLP, FSO and MOPU contracts also potentially to be awarded.

Offshore