The Evolving FPSO Landscape – Healthy Demand, Changing Procurement

By Obo Idornigie
Wednesday, June 21, 2023

After a slowdown in activity during 2020/2021 due to soft commodity prices, demand for FPSOs is picking up.


With exploration hotspots like Namibia’s Orange Basin and the East Mediterranean delivering new finds, the FPSO market outlook is healthy. But shipyard capacity constraints are beginning to weigh on delivery, leading to cost concerns. Furthermore, FPSO demand is competing for yard space with other construction projects.

To mitigate delay risk and cost overruns, some E&Ps have reviewed their FPSO procurement strategies. The Build Operate and Transfer (BOT) model and use of standardized hull designs are becoming more popular.


Strong Demand But Capacity Constraint Headwinds

We expect 35 FPSO projects with an estimated contract value exceeding US$50 billion to get the green light by 2030. At least a third will be new builds, and nearly half earmarked for Brazil and Guyana. The next hotspot could be Namibia, where TotalEnergies and Shell’s exploration success could yield multi-FPSO development programs. The yards in China are the go-to for new-build FPSO hulls and conversion work, but capacity is strained.


FPSO demand forecast (by region): Demand is based on FPSO contract award year


Title FPSO demand forecast (by region): Demand is based on FPSO contract award year

Although new FPSO demand will not be as overheated as in 2014/2015, hull fabrication is now competing for yard space with other projects like FLNG vessels, floating regasification units and wind turbine installation vessels.


China Dominates FPSO Hull Fabrication Market

Historically, the large drydocks (Samsung, Daewoo, Hyundai) in South Korea built the majority of the large, complex FPSOs. But they have been surpassed by the Chinese yards, which have beaten them on price and delivery time. On the conversion side of the market, Singaporean yards like Semcorp and Keppel dominated, but also now face strong competition from China.

  • SBM’s multi-purpose floater hulls (its Fast4Ward standardized hulls) were built at the Shanghai Waigaoqiao Shipbuilding (SWS) yard
  • Modec has also launched its own standardized hull (M350 Hull), which is being fabricated for Equinor at the Dalian shipyard in China for the Bacalhau project in Brazil
  • Cosco Shipping Heavy Industry orders include bp’s Greater Tortue Ahmeyim (GTA) FPSO


E&P Procurement Strategies Evolve

The main FPSO contracting models have been turnkey (used for large, new-build FPSOs) or lease contracts (used for VLCC conversions). But the Build Operate and Transfer (BOT) model is becoming more popular, as is the use of standardized hull solutions.

  • The BOT model: Under this approach, the FPSO is owned and operated by the FPSO contractor for a period before being acquired by the operator. The incentive is on the contractor to deliver on time and budget. ExxonMobil used it with the Liza Unity FPSO in Guyana.
  • Standardized hull: ExxonMobil and Petrobras have been early adopters of SBM’s Fast4ward standardized new-build hull solution, which offers shorter delivery times. The Liza Unity FPSO was operational in less than 36 months from FID. This lead time is more consistent with that associated with VLCC conversions than new builds. Welligence considers TotalEnergies and Shell to be strong candidates for this approach in the event their Namibia finds require multiple FPSOs.


Lead time for FPSO projects operated by selected IOCs (FID to first oil)


  • Redeployment: There is still appetite for re-using existing FPSOs, bringing obvious cost and delivery benefits – this approach is attractive for use in early production systems.Eni is to deploy an existing FPSO at Phase 1 of its Baleine development in Cote D’Ivoire, and it may also redeploy a cylindrical FPSO (a first in Sub-Saharan Africa) for Phase 2. Equinor has earmarked the Petrojarl Knarr for its long-delayed Rosebank development in the UK North Sea, and Aker Energy has identified the Ocean Yield-owned Dhirubhai 1 FPSO for Pecan in Ghana.
  • Reducing emissions: This is a priority – emissions associated with production and processing on FPSOs account for around 60% of the total. Cutting gas consumption for new FPSOs is a key reduction lever, and contractors are working closely with operators to explore technologies to improve efficiencies.

Equinor’s Bacalhau FPSO will use combined cycle turbines, and more operators will likely go down this path. Aker Carbon Capture is developing an FPSO carbon capture solution, and it’s reported this technology will be deployed on two Petrobras FPSOs. However, there is a cost – we estimate the combined cycle gas turbine will increase the topside costs by 20-30%.


Categories: Shipbuilding Vessels Drilling FPSO

Related Stories

Seatrium Signs FLNG Vessel Upgrade Deal for Golar LNG

Shelf Drilling Lands New Jack-Up Contract in Vietnam, Extends Egypt Deal

Yinson, PTSC Get $600M Contract for Vietnam-Bound FSO

Sapura Scoops Over $118M for Chevron, PTTEP Subsea Ops off Thailand

SBM Offshore’s Jaguar FPSO Enters Drydock in Singapore (Video)

CNOOC Finds Oil and Gas in South China Sea

Seatrium Makes First Turnkey FPSO Delivery to Petrobras

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

Yinson Production, “K” LINE Target Europe's CCS with FSIU and LCO2 Solutions

BW Opal FPSO Vessel set for Work off Australia

Current News

CNOOC Brings Online Another Oil and Gas Project in South China Sea

Technip Energies Gets FEED Job for Inpex’ Abadi LNG Project in Indonesia

Keppel, Seatrium in $53M Arbitration Case Over Brazil Corruption Scheme

Subsea7 Secures Work at Black Sea Field off Türkiye

CIP, Petrovietnam Team Up for Offshore Wind Project in Vietnam

Seatrium Signs FLNG Vessel Upgrade Deal for Golar LNG

EnQuest Enters Indonesia with Operatorship PSCs for Two Exploration Blocks

PXGEO Nets First Seismic Survey off Malaysia

SPE Offshore Europe 2025 set to drive transformational change for the energy sector

Shipbuilder Delivers Fast Crew Boat Pair to Aesen

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com