Floater specialist BW Offshore has flagged up about 70 new FPSO project contracts up for grabs over the next five years.

The contractor suggests these new units will be a combination of leased or redeployed FPSOs and newbuilds, with the expectation being that there will be an average of 14 awards per year, according to the company’s latest market outlook. Between 10 and 12 of these are likely to be leased projects, with up to another four expected to be offered to the market on an EPC basis.

Claude Louise Rouxel, chief business development officer at BW Offshore, gazed into his crystal ball during a capital markets day presentation by the company. “In total we foresee around 70 FPSOs that will be ordered in the coming five years combining both lease FPSOs and contracted EPC projects,” he said. “Of the leased projects, we see a slight increase coming from less than 10 to 10 to 12, and on the EPC we see between two and four will be awarded per year.”

Breaking down the numbers further, Rouxel suggested that for smaller FPSOs, with production capacity about 50,000 bbl/d, vessel conversions should be dominant.

“If we move to the larger capacities of 150,000 bbl/d, newbuilds should be favoured together with some conversion and possibly some redeployment. And in between we see that the conversions will be predominant.”

In terms of market capex, Rouxel said that number also is going up as a result, from about US?$10 billion today to $15 billion per year.

Regionally, BW says that Brazil is expected to produce 10 opportunities of large size projects but with commercially tough conditions, while Africa will produce between 10 and 15 projects of all sizes, be less technology-driven and with all types of commercial regimes. In SE Asia it is forecasting between 15 and 20 opportunities of smaller sized projects, with limited technology requirements but in a very competitive market, while in the Gulf of Mexico there will be between two and five technology-driven projects with differing commercial regimes (U.S. and Mexico). Lastly, northern Europe is expected to produce between three and five opportunities, with “expensive but reasonable scope” and where technology is again important.

CEO Karl Arnet noted that the market has changed significantly from a time when FPSO contracts were awarded typically within two to six months. “Today it is more like 12 to 18 months and this allows much better alignment between the client and the contractor to take place, and obviously this allows more time for a significant amount of FEED work before we commit to a lease rate,” he said.

During the capital markets presentation Rouxel addressed the supply and demand picture for FPSOs, saying: “The supply and demand balance over the last eight years has changed drastically.” He pointed out that the number of FPSO contractors in 2006 was as high as 28, while today the picture is very different with less than 10 contractors. “At the same time the number of leased awards has reduced,” he said, from about 20 in 2006 to a constant of about 10 awards per year now. “A very favorable balance,” he commented.

Offshore