IMA reports fewer orders for floating production units

June 26, 2003
Worldwide orders for new floating production units have tapered off, according to the latest quarterly outlook for these systems by International Maritime Associates Inc. (IMA), Washington, DC.

By OGJ editors

HOUSTON, June 26 -- Worldwide orders for new floating production units have tapered off, according to the latest quarterly outlook for these systems by International Maritime Associates Inc. (IMA), Washington, DC.

It found that in the last 4 months the industry has ordered only three production floaters, which is far less than the average orders of 1.3 floaters/month during the past 6 years.

"As a result, the backlog of orders, which had been climbing since 1999, has fallen off the peak of 42 orders in hand seen earlier this year," IMA said.

Processing capacity
The report concluded that the processing capacity of the 150 units currently in operation or available is 10.5 million b/d. The 150 units include 89 floating, production, storage, offloading (FPSO) vessels, 38 semisubmersibles, 15 tension leg platforms (TLPs), 7 spars, and 1 production barge.

Processing capacity will climb by a further 3.6 million b/d once the 39 production floaters on order are delivered, according to the report.
It said, "With the incoming equipment, processing capacity on floating production systems will be more than 31/2 times greater than the figure 6 years ago—almost double the capacity that existed just 3 years ago."

Reasons for slowdown
The report suggested three reasons for the downturn in new orders:

-- Continued political issues are holding up procurement of several near-term floater projects that remain in the bidding and design phase, particularly off West Africa and Brazil.

-- The focus of Gulf of Mexico operators is now on developing subsea tiebacks to production hubs, and they have not placed any floater orders since the Red Hawk spar and the Magnolia mini-TLP in the last half of 2002.

-- The floating production system sector has hit the top of its current expansion cycle and the high level of orders during the past 2 years is now at a more sustainable pace.

Outlook
Despite the near-term order slowdown, the report is optimistic that in the next several months the pace will return to the long-term average, although not to the higher levels seen during 2001-2002.

It sees a requirement for 245-270 floating production systems by the end of the decade, which means that, over the next 5 years, the industry would have to order 62-89 new floaters, comprised of 60% FPSOs, 30% spars or TLPs, and 10% production semisubmersibles.

The report estimates that capital expenditure for these systems during the 5-year forecast period will be $22-31 billion.

The report describes 94 future projects that have a strong likelihood of installing floating production units. Of these, it said, 24 are in the bidding or final design stage and 70 are in the planning stage.

The report said, "West Africa is the clear leader in near-term projects, with 12 projects in the bidding or final design stage. While the Gulf of Mexico has only one project in the bidding stage, there are 26 projects planned or under study."