Converted FPSO Units More in Demand Compared to Newly Built FPSO Vessels
The persistently growing demand for oil has pushed the exploration of deep water oil reserves as the existing onshore oil fields are rapidly depleting. In the past six years, about 50% of the offshore discoveries of oil reserves have been in deep water and ultra-deepwater. All these factors have positively impacted the growth of the global FPSO market. However, the FPSO industry is capital intensive in nature. Building a new FPSO units costs around US$2.5-3 bn. Further, testing, operation, and deployment costs add up to the total investment in a FPSO vessel. High labour cost is also expected to hamper the growth of the market in the coming years.
It has been observed that converted FPSO units are being preferred over newly built FPSO vessels. Hence, the global FPSO market has a huge opportunity to grow with the rising demand for conversion of oil tankers into a FPSO vessel. The FPSO manufacturers are focussing on acquiring former oil tankers and converting them into advanced FPSO vessels.
Oil Production at Goliat Field with World’s Largest FPSO Vessel
Some of the key players in the global FPSO market are SBM Offshore N.V. (Netherlands), MODEC Inc. (Japan), BW Offshore (Norway), Aker Solutions ASA (Norway), Bluewater Energy Services B.V.(Netherlands), Bumi Armada Berhad (Malaysia), Hyundai Heavy Industries Co. Ltd. (South Korea), Teekay Corporation (Bermuda), Yinson Holdings Berhad (Malaysia), and Samsung Heavy Industries Co. Ltd. The market players are focussing on partnerships and collaborations across different stages of the value chain of the FPSO industry.
Italian energy company Eni boasts of the world’s largest FPSO vessel. The company has started production at the Goliat field in the Barents Sea off the coast of Norway with the help of this vessel. The FPSO unit has a capacity of 1 mn barrels of oil and was built to face the environmental and technical challenges across the Arctic sea. The Goliat field is expected to contain around 180 million barrels of oil. Production will take place through a subsea system consisting of 22 wells. 17 of these wells have been already completed.
In the global FPSO market, other players are expected to follow the footsteps of Eni soon and build FPSO vessels with larger capacities. In the near future, the demand for building such large FPSO vessels will surge with extensive deep sea oil exploration.