A total of 54 FPSO projects are up for grabs over the course of the next three years around the world, with demand forecast to remain strong, according to one of the market’s leading players.

SBM Offshore has had its problems in recent times, namely resolving the issues related to the troubled Yme MOPUstor project with the operator Talisman Energy, as well as other less than stellar projects (what it refers to as its ‘legacy issues’). But in its latest results presentation it has come out fighting, flagging up US $7.5 billion in new FPSO orders it has won itself in the last six months – with four more still out to tender as of the end of June.

The contractor paid a $470 million Yme settlement contribution in full in March, and not surprisingly was keen to move on.

Focused specifically on the FPSO market, it has so far won eight con- tracts this year – having won only seven in the whole of 2012 (although in 2010 and 2011 it won 12 in both years).

According to Bruno Chabas, CEO, SBM is focusing on around 20 of the upcoming FPSO projects expected to be awarded to obtain its targeted share of the prize.

Within the next three years its own internal data outlines 54 FPSO projects, with 18 in South America, seven in North America, 17 in Africa, eight in Asia, and four in other areas such as Europe and the Mediterranean (see chart for the lease/sale breakdown).

The company’s order backlog has soared 36% to hit a record level of $22.4 billion for the first half of 2013, including 20-year lease and operate contracts for the ‘Generation 3’ twin FPSOs Cidade de Maricá and Cidade de Saquarema – the company’s largest orders to date, and both being done for Petrobras’s pre- salt Lula field in block BM-S-11, Brazil. Engineering and procurement work is already underway on both in Schiedam and Monaco, where integrated project teams have been set up. Refurbishment work got underway on the hulls at the shipyard in China earlier this year. SBM, which will carry out the construction, says that both will be direct copies of the FPSO Cidade de Ilhabela. The Cidade de Maricà and Cidade de Saquarema are expected to be delivered by the end of 2015 and early 2016 respectively.

SBM also, of course, just recently won Shell’s ultra-deepwater Stones FPSO, due for delivery to the GoM in 2016 (see DI, 20 May 2013, page 1 and 1 August 2013, page 7). However, as the award was post-period the
$2.1 billion bareboat charter value is not included in the $7.5 billion backlog figure for 1H 2013.

The company says engineering and procurement work on the 60,000 b/d FPSO Stones has progressed well during the front- end development phase under the Enterprise Framework Agreement with Shell. This has also allowed for preparatory refurbishment and conversion work, as the hull is already at the Keppel yard in Singapore. Stones will be a flagship project for SBM in many ways, not least because it will be the deepest disconnectable FPSO in the world in 2,896 m (9,500 ft) of water. To be leased for an initial 10 years (with extension options), the total asset value of the FPSO is approximately $1 billion, of which roughly 20% will be received in the form of an upfront cash payment upon startup.

This has all helped boost its revenues 24% year-on-year to $1,669 million, with EBIT earnings rising by 69% to $297 million. Estimated earnings for the full year have now been raised for guidance to $4.3 billion from $4 billion.

Chabas pointed out that with around 30% of the world’s oil currently being produced offshore, the number was likely to rise to around 50%, with much of that to come from the deep and ultra-deepwater sectors. With a development breakeven cost of anywhere between $30-80 per barrel, the average large Generation 3 FPSO has production costs put at below $5/barrel.

-SBM is also considering the sale of its brand new SBM Installer, which is currently undergoing sea trials. The company said the DSV and construction support vessel is no longer within its strategic FPSO focus, and so may now be sold.

The contractor also added that it has been informed by Petrobras that the operator does not intend to further extend the contract for the FPSO Brasil at the end of this year, after one and a half years of extensions, completing a total contract period of 11 years.