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Demand for New Offshore Rigs is more than US$20.6 billion in the short term

Demand for Jackups, Semi submersibles, SPAR, TLP’s and FPSO can be projected based on the oil fields currently undergoing development. While for special vessels like FPDSO, CNG, FSRU and FSU is based on specific project owner’s plans and announcements of such plans. In the short term from FY2007 to 2010, the offshore vessels to be ordered for delivery before or by 2010 are projected to be of value exceeding US$20.6 billion as a conservative estimate excluding projects not opened for tender yet. The estimate is based on around 50 fields under development or consideration for development before 2010, as confirmed in the news-media by stakeholders. On an average for a rig (Jackups or Semi submersible) it takes 12 – 18 months for delivery from the order date while for FPSO, SPAR and other specialized ultra deep fleet two years is the average delivery period.

The average cost of a FPSO around US$250 m, TLP @US$350 m, Semi sub @US$300 m, SPAR @US$400 m and Other Rigs (Platforms etc.) @US$150 – 200 m each, has been used for computing the estimated orders for shipbuilding yards.

 Rising Trend in Mode and Fields of Deployment for FPSO / FSO

Unlike Jackups and Semi Submersible rigs, FPSO/FSO are designed and built or converted with strategies of long term returns and flexibility in multiple deployments during the lifespan. In the last decade when field owners decided to increase the production, the trend was to charter FPSO/FSO from converted old supertankers or VLCC ships. The traditional energy transporters (Ship Owners) have identified it as opportunity for future growth and started converting as well as placing orders for new construction to service the demand of oil majors as well as participate in the energy sector directly instead of as a transporter only. The examples are TK Shipping, Tanker Pacific, Frontlines, and Maersk Lines etc.

 The mode of deployment and strategies of FPS type can be one of the following: -

<!--[if !supportLists]-->*      <!--[endif]-->Extended Well Test Units: FPS units are equipped with limited production facilities and are used for less than one year. Conversion of a tanker or use of an existing fleet is the optimum solution.

<!--[if !supportLists]-->*      <!--[endif]-->Early Production Units: FPS with basic production facilities and is used for 1 to 2 years. Redeployment to another field would require no or little modifications.

<!--[if !supportLists]-->*      <!--[endif]-->Marginal Field Development: FPS for full field life and is designed to meet the specific field requirements. The usual period is for 4 to 7 years and after some modifications can be redeployed to another field. Such FPSO’s are leased or can be on time charter.

<!--[if !supportLists]-->*      <!--[endif]-->Long Field Life: FPS designed for 15 – 20 years life span, same as the life cycle of the field. These are dedicated units and are normally ordered by the field owners for example Petrobras; (Brazil’s National Oil Company) is the pioneer for using converted FPSO and more FPS are being used for continuing expansion of their new fields.

 

The FPS for first three categories are normally on charter or short term lease from FPS operators like SBM, Blue Water, Modec (top three FPS designers, owners, managers & operators in the world, among new increasing number of FPS operators). SBM Offshore N.V. has recently received number of orders in both the lease and the turnkey supply segments of its activities. The short term lease contracts are for Semi sub Thunder Hawk (GoM) and MOPU for Yme (North Sea) while supply orders for three offshore structures. All these orders are yet to be contracted to shipbuilding yards (SBM, Oct 2006).

          In the context of current field development activities, the largest surge in demand is for FPS as these units can be deployed faster as well as investment risks are diversified between various stakeholders. There are about 140 to 150 FPS currently in operation with about 75 purpose-built, while balance were converted from old tankers. In addition there are about 36 on order; undergoing construction and the expected new orders are in the range of 30 to 50 subject to availability of dock space in the shipbuilding yards. There is a good potential for some demand to be met by converting remaining single hull tankers.

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