FPSO Market In 2021 Hits Pre-Pandemic Levels, 2022 To Carry Momentum

The FPSO market almost nixed the pandemic’s effect in 2021 with the pace likely to continue in 2022, with 10 new awards expected, according to a report by Rystad Energy.

Two lease contracts were awarded in the fourth quarter of 2021, bringing the total for the year to 10 – up from just three in 2020 – a strong rebound for the FPSO market.

Rystad stated that demand for FPSO units in Brazil was a significant contributing factor that drove 2021 growth, with seven of last year’s 10 contract awards being Brazilian projects. Brazil is expected to continue driving global awards in 2022, with an additional three FPSOs expected.

Not only is Brazil delivering more awards, but the Brazilian projects are expected to be the largest in terms of production capability. For instance, the P-80 FPSO will become the ninth in the Buzios area. It will have an oil processing capacity of around 225,000 bpd and a gas processing capacity of about 423.7 million cubic feet per day, which is the same size as the FPSO Almirante Tamandare awarded in early 2021.

In 2022, fellow South American player Guyana is expected to contribute one FPSO to the global total, with the UK adding two projects. Angola, Australia, China, and Malaysia are forecast to each award one new FPSO contract this year.

“With around 30 FPSO units under construction or queued up for construction, and another 10 expected to be awarded over the next 12 months, the market is set to build on its recent success. However, as witnessed in many other facets of the global economy in recent months, supply chain concerns linger and will test the market’s ability to take in new contracts without uncontrollable cost overruns and delays,” says Zhenying Wu, a senior analyst with Rystad Energy.

The FPSO market saw a strong finish to 2021, with two lease-and-operate contracts, two front-end engineering, and design (FEED) contracts, and one contract extension awarded in the fourth quarter.

In Brazil, Yinson has been awarded two letters of intent from Petrobras to supply the Integrado Parque das Baleias FPSO and for operation and maintenance services under a lease-and-operate agreement lasting 22 years and six months from the day of final acceptance. The FPSO will be deployed at the Jubarte field in the North Campos basin and is scheduled to start production in late 2024.

Enauta Energia issued Yinson another LOI to provide, operate, and maintain an FPSO at the Atlanta field in the Santos basin in Brazil. The job covers the adaptation of FPSO OSX-2 by Yinson with warranty and operations and maintenance for 24 months. The FPSO acquisition and adaptation cost will be around $505 million. Yinson has the option to purchase a unit linked to funding.

If the call option is exercised, it will be linked to charter, operation, and maintenance contracts for 15 years, which may be extended for another five years, totaling $2 billion for the 20 years. The contract is Yinson’s third project award in Brazil and is subject to a final investment decision during the first quarter of 2022.

Source: RigZone

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