FUTURE FPSO PROJECTS IN THE

DECISION-MAKING PROCESS

Presentation by Jim McCaul at the

Emerging FPSO Forum 25 September 2013

OUTLINE OF PRESENTATION
The Pros and Cons of FPSOs
Profile of FPSO use worldwide
FPSO Projects in the Planning Stage
Our Forecast of FPSO Orders
Issues Impacting Outlook

FPSO PROS AND CONS

PRO

CON

Has field storage and can be used in remote

locations self contained

Subsea tiebacks create higher well

maintenance costs

Can operate on shallow or ultra-deepwater

fields

Turret/swivel machinery complex and failure a

major problem

Less weight sensitive than other types of FPSs

Leasing transfers some risk from field operator

to contractor

Cost and delay surprises when converting

tankers to FPSOs

Redeploying an FPSO not as easy as it may

appear

Assumed residual value used as a competitive

tool in leasing bids

Deck area allows flexibility in process plant

layout

Surplus/aging tankers can be used for

conversion

Can be modified/redeployed following field

depletion

Quick disconnect turrets enable emergency

relocation

Source: BWO

204 FPSOs ARE IN SERVICE,

AVAILABLE OR ON ORDER
(number of units as of September 2013)
56

42

28

On
OnOrder
Order
Existing
Available

25
14 14

14
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27% of FPSOs are offshore

Brazil
21% are located offshore Africa
14% are off Northern Europe
12% are in Southeast Asia
7% are off China
7% are off Australia/NZ
5% are in other locations
7% are without field assignment
* * * *
13 FPSOs are currently off field
and looking for work
1 FPSO being built has no field
assignment
Note: Data exclude 4 small FPSOs used for well test in the GOM and
2 FPSOs built for emergency spill recovery

84% MORE FPSOs IN SERVICE THAN 10 YEARS AGO

WITH 123% MORE OIL PROCESSING CAPACITY
Number of FPSOs
in Service

Total Oil Processing

Capacity on FPSOs
(000s b/d)

Avg. FPSO Oil

Processing Capacity
(000s b/d)

Avg. Water Depth of

FPSO Installations
(meters)

2003

2013

% Chg.

2003

2013

% Chg.

2003

2013

% Chg.

2003

2013

% Chg.

Africa

18

38

111%

1396

4390

214%

78

116

49%

208

678

226%

Australia/NZ

12

33%

657

979

49%

73

82

12%

152

290

91%

Brazil

37

311%

845

3937

366%

94

106

13%

826

1075

30%

Canada

100%

150

250

67%

150

125

-17%

90

105

17%

China

11

13

18%

734

902

23%

67

69

4%

105

77

-27%

Gulf of Mexico
India

n.a.

280

n.a.

140

n.a.

1339

n.a.

n.a.

120

n.a.

60

n.a.

643

n.a.

Mediterranean

-40%

174

77

-56%

35

26

-26%

228

321

41%

N. Europe

19

22

16%

1783

1884

6%

94

86

-9%

167

159

-5%

SE Asia

11

22

100%

401

877

119%

36

40

9%

67

137

104%

Global Total

83

153

84%

6140

13696

123%

74

90

21%

227

534

135%

Note: Data exclude 13 FPSOs currently without field contract, a spill recovery FPSO and 4 small FPSOs used for well test on the Mexico side of GOM.

44% OF FPSOs IN SERVICE OR

ON ORDER ARE LEASED
Total
FPSOs

Owned
Units

Leased
Units

% Leased

Africa

42

23

19

45%

Australia/NZ

14

36%

Brazil

56

31

25

45%

Canada

0%

China

14

14

0%

Gulf of Mexico

100%

India

100%

Mediterranean

33%

N. Europe

28

16

12

43%

SE Asia

25

10

15

60%

Global Total

190

107

83

44%

Note: Data exclude 14 existing and on order FPSOs without field contract, 2 spill recovery FPSOs and 4 small FPSOs used
for well test on the Mexico side of GOM.

MORE THAN 120 FPSO PROJECTS ARE IN

THE VISIBLE PLANNING STAGE
These are announced discoveries where an FPSO is either
planned or logical production solution given the location
and field characteristics
~25% are in the bidding or final design stage
~75% are in the planning and study phase

Taking into account projects requiring multiple production

units, development of the discoveries could require 135 to
140 FPSOs
Another 20+ discoveries could require an FPSO, BARGE,
MOPU/FSO, SUBSEA or other system

WHERE FPSO PROJECTS

ARE BEING PLANNED

Brazil is clearly the major location

for future FPSO projects 51
projects in planning stage

Africa is next in line with 13

projects in Angola, 11 Nigeria and 9
elsewhere

SE Asia is in 3rd place with 11

projects

No. Europe is in 4th place with 8

projects

In 5th place is the GOM 6 projects,

all on the Mexican side

Brazil
41%

51

33
Africa
27%

14
6

GOM
5%

11

Other
11%

SE Asia
N. Europe 9%
7%

Discovery

Water
Depth

Estimated
Production Start

Total
Shell
Chevron
CNOOC
Shell

1600
1200
1768
550
2480

2016/17
2017/19
2018/20
2020/25
2020/25

Brazil
Brazil
Brazil
Brazil
Brazil
Brazil

Queiroz Galvao
Petrobras
Petrobras
Petrobras
Petrobras/ANP
Petrobras

1560
2150
2027
750
2200
1800

2017/19
2016
2018
2020
2020/25
2019

Mexico
Mexico
UK
Norway
Falklands
Malaysia
Malaysia
Malaysia
India

Pemex
Pemex
EnQuest
Lundin
Premier
Hess
Petronas
Shell
BP/Reliance

115
2500-3000
100
342
450
155
65-70
1430
1743

2016/18
2018/22
2016/17
2020/25
2018/20
2015/16
2016/18
2018/20
2019-22

Country

Field Operator

Angola
Nigeria
Nigeria
Congo
Nigeria

Brazil
Oliva/Atlanta BS-4
Carioca BM-S-9
Carcara BM-S-8
Espadarte Module III
Libra Complex
Franco Leste
Other Regions
Ayatsil/Tekel
El Perdido
Kraken 9/2b
Gohta
Sea Lion
Belud
Bunga Dahlia/Teratai
Ubah
D-56

Africa
Blk 32 -- Kaombo GG
Bonga Southwest
Nsiko
Elephant
Bobo

EXAMPLES OF FPSO
PROJECTS IN THE
PLANNING STAGE

(meters)

LOCATION AND TIMING OF

VISIBLE FPSO PROJECTS
Likely Production
Start

Number FPSOs
Required

Visible
Projects

2014/20

2020+

2014/20

2020+

Africa

33

17

16

17

16

Australia/NZ

Brazil

51

29

22

29

36

Canada

China

Gulf of Mexico

Mediterranean

N. Europe
Other So. Amer

8
3

7
3

1
0

7
3

1
0

SE Asia

11

11

11

SW Asia

123

79

44

79

58

Global Total

PROCESSING PLANT CAPACITY IN

VISIBLE FUTURE FPSO PROJECTS
(b/d in 000s)

<50 b/d

50-100 b/d

29

14

Gas

10
4
44
100-150 b/d

58% require topside plants with

100,000 to 200,000 b/d oil
processing capability
200+ b/d

21% require topside plants with

50,000 to 100,000 b/d capacity
10% involve small FPSOs with
less than 50,000 b/d plants

36
150-200 b/d

3% are mega- FPSOs with more

than 200,000 b/d processing
capacity
7% are primarily gas FPSOs

BREAKDOWN OF PROCESSING CAPACITY REQUIRED FOR

VISIBLE FUTURE FPSO PROJECTS
(b/d in 000s)

FPSOs Required Between 2014-2020

50 to 100 to 150 to
<50 b/d 100 b/d 150 b/d 200 b/d 200+ b/d

Africa

Australia/NZ

Brazil

15

FPSOs Required 2020+

Gas

50 to
100 to
150 to
<50 b/d 100 b/d 150 b/d 200 b/d 200+ b/d Gas

12

21

Canada

China

Gulf of Mexico

Mediterranean

N. Europe

Other So. Amer

1
5

SE Asia

SW Asia

Global Total

14

2
1

19

24

11

1
0

10

20

25

WHAT WILL DRIVE THE PACE OF FUTURE

FPSO ORDERS?
Underlying market conditions
Smaller FPSOs for marginal fields are influenced by near term oil price
expectations and availability of financing
Large FPSOs intended for major developments tend to be less sensitive
to oil price and financing

Passing the FID hurdle

But even the biggest oil company has to make choices -- there are
budget constraints and limits on available personnel to manage project
implementation
Whether an FPSO project gets into the CAPEX plan depends on its
ranking in terms of expected return on investment
This will be determined by the project economics and the economics
of other investment possibilities

MARCH 2013 FORECAST OF FPSO ORDERS

OVER THE NEXT 5 YEARS
Most Likely Forecast Assumptions

Forecast
next 5 years

130

Actual
past 5 years

76

110
90

Global economic growth averages 3

to 4 percent annually over next few
years
Oil demand growth remains around 1
percent per year
Mideast tensions continue, but no
major oil supply interruption
Oil price expectations hover in $90 to
$110 range
Some cost growth and delivery
bottlenecks in the FPSO supply base,
but not enough to slow major project
starts or erode contractor profits

No. Orders
2008/12

Low
Forecast

Most
Likely

High
Forecast

No. Orders 2013/17

No major environmental incident

involving an FPSO
No major impact from shale oil on
deepwater investment

ASSUMPTIONS UNDERLYING THE

HIGH AND LOW FORECASTS
Low Forecast Assumptions

China and/or India economies falter,

Europe/U.S. economies continue to stagnate
over next few years

High Forecast Assumptions

Global economic rebound accelerates quickly

from 2013 onward, rises to 4 %+ per year

Oil demand growth tracks upward with

economic growth

Mideast tensions grow, oil supply interrupted

Shale oil and/or tight oil projects meet

worldwide opposition, delaying project starts

World GDP growth turns downward

Global oil demand growth falls as economic

activity and world output slows

Tight oil, shale oil finds grow internationally,

technology advances lower cost

Many unconventional onshore fuel projects

encounter continuing logistics constraints

Oil price expectations fall to $70 to $90

range, negating commercial viability of many
visible marginal floating production projects

Oil prices spike to $150+ and expectations

remain above $120, making most visible
marginal floating production projects
commercially viable

Contractors experience supply constraints,

raising costs, creating delivery delays

Little cost growth, few delivery constraints in

the floater supply chain

THE LOW END OF THE MARCH FORECAST IS

NOW LOOKING MORE LIKELY
Portfolio of potential FPSO projects has been
growing
But new project starts have slowed 9 FPSOs have
been ordered thus far in 2013, an average of 1
order/month
Cost growth, access to financing, market barriers,
other issues seem to be creating barriers
We now see the low end of the forecast range i.e.,
~90 FPSOs as the most likely forecast of FPSO
orders

ISSUES
Local content requirements are
Creating market entry barriers and limiting
competition
Raising costs e.g., Egina FPSO $3.1 billion!
Clogging the supply chain

Shale oil/tight oil growth is a threat to deepwater

Added supply could result in lower oil prices
Shale oil projects could draw investment resources
from deepwater
Deepwater costs are increasing shale oil/tight oil
cost are falling

Thank You
If you would like to discuss any aspect of
this presentation or get further details on
the FPSO market, please contact
Jim McCaul
imaassoc@msn.com or
1 202 333 8501
Our website has further information that
you may find useful. Please give us a visit.
www.imastudies.com