South America’s Oil Boom Boosts FPSO Demand
The floating generation, storage and offloading (FPSO) market has almost wiped out the effect of the pandemic in 2021 and is expected to continue at a steady pace in 2022, with 10 new rewards expected, according to a report from Rystad Energy . Two leases were awarded in the fourth quarter of 2021, bringing the total for the year to 10 – down from just three in 2020 – a strong rebound for the FPSO market.
The demand for FPSO units in Brazil was a major factor driving growth in 2021, with seven of the ten contracts awarded last year being Brazilian projects. The South American nation is expected to continue winning global awards in 2022, with three additional FPSOs expected. Not only does Brazil get more awards, but Brazilian projects are expected to be the most important in terms of production capacity. For example, the unit destined for the P-80 will become the ninth in the region of Buzios. It will have an oil processing capacity of approximately 225,000 barrels per day (bpd) and a gas processing capacity of approximately 12 million cubic meters per day, the same size as the FPSO Almirante Tamandare awarded in early 2021.
In 2022, the South American player Guyana is expected to contribute a FPSO to the world total, with the UK adding two projects. Angola, Australia, China and Malaysia are each expected to award a new FPSO contract this year.
“With around 30 FPSO units under construction or awaiting construction, and 10 more expected to be awarded over the next 12 months, the market should build on its recent success. However, as evidenced by many other facets of the global economy in recent months, supply chain issues persist and will test the market’s ability to accept new contracts without cost overruns or uncontrollable delays ”, said Zhenying Wu, senior analyst at Rystad Energy.
The FPSO market ended well through 2021, with two operating leases, two front-end engineering and design (FEED) contracts and one contract extension awarded in the fourth quarter.
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In Brazil, Yinson was awarded two Letters of Intent (LOI) from Petrobras for the supply of the FPSO Integrado Parque das Baleias (IPB) and for the operation and maintenance services under an operating lease of ‘a period of 22 years and six months from the date of final acceptance. The FPSO will be deployed on the Jubarte field in the North Campos basin and is expected to enter production at the end of 2024.
Enauta Energia issued another letter of intent to Yinson to supply, operate and maintain an FPSO on the Atlanta field in the Santos Basin in Brazil. The work covers the adaptation of the FPSO OSX-2 by Yinson through a turnkey engineering, procurement, construction and installation (EPCI) contract, with warranty and operation and maintenance for 24 months. The cost of acquiring and adapting the FPSO will be approximately $ 505 million. Yinson has the option of purchasing a unit linked to the financing. If the purchase option is exercised, it will be tied to 15-year charter, operation and maintenance contracts, which can be extended for an additional five years, totaling $ 2 billion for the 20 year. The contract is the third project awarded to Yinson in Brazil and is subject to a final investment decision in the first quarter of 2022.
Elsewhere in South America, ExxonMobil awarded SBM Offshore an FPSO FEED contract for the deepwater development of Yellowtail in the Stabroek block off the coast of Guyana. The FPSO will be designed to have an oil processing capacity of 250,000 bpd, a gas processing capacity of 450 million cubic feet per day and storage of up to 2 million barrels. When complete, the FPSO will be the company’s largest production unit ever to be built.
ExxonMobil currently produces from Stabroek via the FPSO Liza Destiny. FPSO Liza Unity arrived in Guyanese waters on October 26, and ExxonMobil expects both units to produce this year. When the Prosperity and Yellowtail projects come online in 2024 and 2025 respectively, ExxonMobil will have a total processing capacity of over 800,000 bpd in Guyana.
In Nigeria, BW Offshore has obtained a lease extension for the FPSO Sendje Berge, operated for Addax Petroleum Exploration (Nigeria) Ltd, which will run until the fourth quarter of 2022.
In Norway, Aker Solutions received a letter of intent for a FEED contract from Equinor for the supply of an FPSO to be used on the Wisting field in the Norwegian sector of the Barents Sea. The scope of FEED is to provide a front-end engineering design for a circular FPSO solution, which includes an option for the EPCI from the top of the FPSO. If the project moves to the execution phase, the EPCI option potentially represents a significant contract estimated between $ 960 million and $ 1.45 billion.
By Rystad Energy
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