Friday, 22 April 2016

Signs of Recovery in Global Oil Prices Hint at Beginning of Better Times for Global Floating Production Systems Market

Except for a brief period between April 2013 and June 2013, when crude oil prices in the global market went below US$100 per barrel, the price structure of the market remained steady for a larger part of the beginning of 2013 and mid of 2014. But oil prices tumbled down as 2014 progressed and from over US$100 per barrel of crude oil, the global market saw oil prices reaching as low as US$36 per barrel as the end of 2015 approached. The blatant blow to oil prices brought a significant change to the overall dynamics of the global oil and gas market. Thus the liquidation of ongoing projects, cancellation of tentative projects, severe cost cuttings, and announcements of lower capital spending became common in the market.

Global Floating Production System Market Sees a Decline in Contracts

A huge decline in the number of floating production system contracts has also been observed since the start of 2015. The last major FPSO (floating, production, storage, and offloading) contract was awarded in January 2015 for an offshore exploration project in Ghana. This, a tentative contract for a production semi in July, and a few other orders for floating regas vessels make the total orders for the global floating production systems market over the past year and half. This is far low when compared to the historical pattern of orders received by the market: the market has had contracts for at least 12 FPSOs annually for over the past ten years.

There is no doubt that the market for floating production systems is headed on a rough growth path. The past few months have been difficult for most auxiliary markets in the oil and gas industry. The dearth of new contracts has forced manufacturers as well as equipment suppliers to make huge cuts in their employee base and annual expenditure. But the market for deepwater oil and gas production will rebound as the global demand for oil and gas is never-ending and continuously increasing. Though the scenario is not that clear at this point, there are indications that the rebound is starting.

Past Numbers Remind of Good Times and of the Growth Potential that the Market Holds

In a market research report published by Transparency Market Research in 2013, the global market for floating production systems is projected to exhibit a 17.20% CAGR over 2013 and 2019. According to the report’s predictions, the market, which had a valuation of US$12.6 bn in 2012, was expected to reach US$38.7 bn by 2019.

The numbers may seem outrageous in current times, with oil prices even less than half from the time the predictions were made. It is also true that oil prices cannot be predicted by anyone, since they are volatile.

But the fact that the oil and gas market is rebounding for good cannot be denied as well. In future the market will witness an upward trend in global oil prices and market analysts suggest that recovery of the global oil and gas market is underway. World producers are coming to terms about the necessity of freezing production and stalling projects concerning the exploration and recovery from new shale wells in the U.S., and steadily, the current imbalance in supply and demand will be sorted and there will be a gradual recovery in oil prices. Like all other markets working in coherence with the global oil and gas industry, the floating production systems market will also flourish.

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