The FPSO (floating production storage and offloading) market will garner remarkable traction with consistent activities across offshore exploration and production on account of the diminishing onshore oil & gas reserves. The rising preference for fast-track floating solutions has also led to advancements in subsea technologies.

There has been a substantial increase in the number of efforts towards the discovery and development of smaller reserves that are located at remote offshore sites. To support the same with an instance, Chevron Corporation, in January 2018, gave insights on the discovery of an ultra-deep-sea oil reserve, found at a water depth of approximately 1,900 meters, and situated offshore in the U.S. Gulf of Mexico. The redeployment benefits of these units, upon the exhaustion of one, to different production sites and their abilities to withstand severe weather conditions, will boost the growth prospects for the industry.

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In fact, estimates have suggested that the global FPSO market size will register around USD 30 billion in annual remuneration by 2025.

Higher demand for converted FPSO vessels

The converted FPSO market is anticipated to showcase substantial growth numbers. This can be attributed to the higher demand and capabilities of converted FPSO products in redeploying and refurbishing a wide range of retired VLCC and ULCC vessels. Besides, the initiation of international maritime regulations has pushed leading industry participants to invariably pursue redeployment and conversion of these assets into FPSO vessels. The relatively lower Capex and the shorter development schedule pertaining to converted units will further encourage their deployment.

Advancements in offshore technologies

The demand for new built FPSO products will attain significant traction in the coming years due to increasing investments for the development of deep as well as ultra-deep-water reserves. The new built vessels come with some advanced safety features and optimum design parameters, which make them flexible towards field life extension and offer lowered operational costs. They are also gaining popularity due to the consistent developments in offshore technologies, such as double hull & cylindrical hull designs as well as separable turret systems.

Preference for ultra-deep-water depths

Revenue from the ultra-deep FPSO market is expected to record a significant value through the analysis timeframe considering the prominent presence of various proven deep-water reserves. The influx of drilling and seismic technologies has paved the way for rising inclination towards the development and production activities from ultra-deep offshore reserves. To quote an instance, the EIA estimated that the oil production from ultra-deep waters increased by 25% in a decade, showing the rise in value from 7 million BPD extracted in 2005 to 9.3 million BPD in 2015.

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Latin America to be a key market

Latin America is likely to hold a substantial share in the FPSO market through 2025 due to a surge in the number of state-owned companies. The consistent government support in the region through initiatives has resulted in the recent discovery of significant pre-salt oil reserves.

According to estimates by Petrobras, the Campos and Santos basins, which are located offshore in Brazil comprise nearly 6 billion barrels reserve of pre-salt oil. Furthermore, the recent local content regulation to imply easier and lower requirements with reduced fines for E&P contracts in Brazil will boost the regional vessel deployment.

Industry expansion from competitive dynamics

Prominent participants in the FPSO industry are focusing on business marketing strategies and are taking up projects to sustain the increasing competition. To cite an instance, in September 2020, Malaysia-based energy company, Bumi Armada, secured its third FPSO project in India. Its joint-venture firm, Shapoorji Pallonji Bumi Armada Godavari Pvt Ltd., also won accolades for charter hire and operations of its FPSO vessel.

The rise in development challenges, such as site accessibility, excessive costs, environmental conditions, and decommissioning issues, across fixed infrastructures, will further fuel the deployment of the FPSOs as a viable alternative option.

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