While falling oil prices have forced companies to spend less money and hold off on some projects, the current price environment is not expected to crush future floating production spending, which is forecast to rise to $81 billion by 2019 by Douglas-Westwood.

The energy research firm this week said the predicted spend is 73% more than what was spent on such units from 2010 to 2014.

“FPSOs represent by far the largest segment of the market both in numbers (87 installations) and forecast capex (81%) during 2015-2019. TLPs [tension-leg platforms] account for the second largest segment of capex (9%) with FPSSs third (7%),” Balwinder Rangi, the report’s author, said in a prepared statement. “Latin America will see nearly a third of the 110 installations forecast and 32% of the projected capex.”

Petrobras with its presalt production plans is in the driver’s seat.

By year-end 2018, Petrobras plans to have installed 20 new production units targeting presalt hydrocarbon resources, mostly in the Santos Basin.

This year, the FPSO Cidade de Itaguaí vessel is scheduled to come onstream in the Iracema North area of the Santos Basin. With a storage capacity of 1.6 MMbbl of fluids, the vessel will be capable of processing 150,000 bbl/d of oil and 280 MMcf/d of gas, according to MODEC. The vessel is scheduled for delivery in fourth-quarter 2015.

Capacity will ramp up significantly, if all goes according to plans, in 2016 when seven FPSO vessels are scheduled to go online. These include the FPSO vessels Cidade de Maricá, Cidade de Saquarema, P-66 and P-67, to be installed in Lula; P-74 and P-75, in Búzios; and Cidade de Caraguatatuba in Lapa, according to the company’s five-year strategic plan.
Plans include bringing five more systems aboard in 2017—P-68 and P-69 in Lula; P-76 and P-77 in Búzios; and P-70 in Iara—followed in 2018 with one unit in the Campos Basin presalt and four units in the Santos Basin.

However, plans could change. Bloomberg reported this week that Petrobras’ rig supplier, Sete Brasil Participacoes SA, said the shipyard it hired to build seven of the drillships is canceling the contracts.

In addition, Petrobras has been rocked by corruption scandal and remains deep in debt with a new CEO and executive officers now at the helm. The company, like many other oil and gas companies, is considering cost cuts.

Following Latin America, Asia will account for about a quarter of the forecast installations, having about 13% of the spend, Douglas-Westwood said.

“Africa is important in value terms, with 22% of the projected capex. Western Europe is expected to form 15% of forecast spend. Deepwater expenditure will make up 68% of the global FPS market,” Rangi said.

Douglas-Westwood said the value of annual installations could increase from about $12 billion this year to $21 billion in 2017 before falling to $17 billion in 2019. “Projects already ordered will account for much of this spend,” according to the firm.

However, despite the capex growth, Douglas-Westwood called the outlook for 2015 orders “poor.”

“The low oil price is expected to impact the market, leading to a number of delayed project sanctions,” Rangi said. “This can be seen in the declining number of orders for 2015 and subsequent installation decline in 2018. Projects already under construction are unlikely to be affected.”

Added Damilola Odufuwa, the report’s editor, “Financing remains a challenge for leasing contractors and smaller E&P companies as a result of the lower oil prices. Low oil prices have placed additional strain on company budgets and greater efforts are being made to ensure delays and cost over-runs are avoided. Local content requirements are also pushing up prices and extending lead times, particularly in Brazil.”

Contact the author, Velda Addison, at vaddison@hartenergy.com.

Offshore