FLOATING OIL PROJECTS ARE BOOMING

Posted on: August 23rd, 2012 by Stas

FLOATING OIL PROJECTS ARE BOOMING

BY STAS MARGARONIS

 

High oil prices are driving demand for new offshore oil units to an all time high, according to a FLOATING PRODUCTION SYSTEMS report issued by International Maritime Associates (IMA), based inWashington,D.C.

Jim McCaul, head of IMA, says that continued high oil prices plus the large reserves of oil being found in deep water are driving oil production on to the world’s oceans.

Oil exploration is becoming more expensive and requires a new generation of floating vessels and platforms. As of August 2012, there were orders for forty-nine  Floating Production Storage and Offloading (FPSO) vessels and twenty-five types of floating production systems.

The areas of most intense development are:

  • Gulf of Mexico,
  • CoastalBrazil
  • West Africa
  • Europe’s North Sea, Australia/New Zealand and South East Asia.

IMA says the growth of new projects has been dramatic:

2007 = 122 projects

2011 = 196 projects

2012 = 233 projects

Statoil is the Norwegian oil exploration giant and Helge Hove Haldorsen, is Statoil Vice-President for Strategy Development & Production,North America.  Holdorsen told a Marine Money conference in New York that:

*Fossil fuels will still be “king in 2030.”

*The world is not running out of oil, but running out of easy oil sources to develop.

*Thus, 80% of new oil generation will come from offshore drilling platforms..

*250 floating production units will be needed by 2020.

*250 new oil rigs will need to be built by 2020.

McCaul says “deepwater rig activity is an excellent predictor of future demand in the floating production sector. There is a direct lagged relationship between the number of active deepwater rigs in service and number of floating production project starts two to three years out. More rigs will generate more finds – accelerating future floating production system requirements.”

The most demand is for FSPO vessels, which can cost up to $2 billion.

After drill ships find oil, McCaul explains,   FPSOs are deployed to store the oil and shift it on to product tankers that tie up to these huge man-made floating terminals.

The FPSOs are designed to withstand the worst of high winds, waves that the world’s oceans can mete out and can be moored in 3,000 meters of ocean with adjustable connections to maintain the flow of oil under adverse weather conditions.

Companies such as MODEC and SBM lease these vessels to field operators such as Exxon, Petrobras, Shell, BP, China National Offshore Oil Company and others, McCaul says.

FPSO operator, SBM Offshore, saw its profit  come marginally short of market forecasts in the first half of 2012, according to the maritime newspaper TRADEWINDS: “It was, however, significantly better than the $251m loss it carded at this stage 12 months ago. SBM explains revenue picked up from $1.46bn to $1.67bn thanks to a rise in orders at its turnkey systems segment.”[1]

McCaul says  “Singapore and Korearemain major supply sources for floating production units.   ButBrazilandChinaare increasing their presence in this market.”

Chinese shipbuilders, such as COSCO Corp, are challenging Korea and Singapore in their traditional stronghold of offshore oil rig building and have managed to secure 20% of the $72 billion world market, according to Reuters.

News reports say that China will shut down a number of smaller, inefficient shipyards and focus the nation’s shipbuilding energies onto a small number of big shipbuilders such as Rongsheng Heavy Industries. A MARINE LOG report saysChina’s secret weapon in challenging  Korea and others may be the power of its government-backed financial institutions to support its construction activities.

However, TRADEWINDS also reported that, as a result of declining shipbuilding orders, Rongsheng is having its problems: “China Rongsheng Heavy Industries will struggle to hit its full-year order target after a below par first half, a leading analyst says.”

The newspaper quoted another analyst saying that the company might now be reporting a loss without its government subsidy  and furthermore : “In recent weeks Rongsheng’s non-executive chairman Zhang Zhi Rong has been the subject of an insider dealing enquiry relating to China National Offshore Oil Company’s $15.1bn bid for Canadian firm Nexen.”[2]

 

 

 

 

 

 

 

 

 

 

 

 


[1] TRADEWINDS, “SBM Misses The Mark” August 16, 2012

[2] TRADEWINDS, “ Rongsheng To Miss” August 22, 2012

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