According to the analyst, the P-78 and P-79 FPSOs represent a change in Petrobras` contractual strategy. Petrobras had contracted all FPSOs under lease and operating agreements. However, the shift to turnkey outsourcing paves the way for a wider range of potential suppliers. The company has taken the plunge as the market for leasing very large FPSOs approaches full capacity. However, this is not a unanimous opinion. An international entrepreneur says that while cost reduction is a key mandate in the current climate, the conservative nature of the oil and gas industry will ensure that there is no significant deviation from the basic and traditional approach of using designs that are highly tailored to specific projects. While some aspects may become more standardized, industry-wide standardization between oil companies is considered unlikely. When it comes to SBM Offshore N.V. and/or its subsidiaries in general, or when no utility is served by the identification of the respective company(ies), “SBM Offshore” or “the Company” is sometimes used for convenience.
In the second quarter of 2021, a joint venture between Saipem and Daewoo Shipbuilding and Marine Engineering (DSME) received an order for the supply of the P-79 FPSO for the Búzios field in Brazil. The contract is worth $2.3 billion, with Saipem`s stake representing $1.3 billion and DSME`s stake representing the remainder of the total value. DSME will build the hull and living spaces, while Saipem will cover the peaks. The FPSO will be a new building with an oil processing capacity of 180,000 bbls/d, a gas processing capacity of 254 Mcf/d and a storage capacity of 2 MMbbl. The project will also boost Brazil`s domestic manufacturing activity, as Petrobras needs a 25% share of local content. Samik Mukherjee, McDermott`s Executive Vice President and Chief Operating Officer, said: “Our people and resources bring the proven project execution, integrated engineering and modularization capabilities that are critical to reliability and delivery success. We will align these strengths with those of SBM Offshore to jointly drive a coherent and effective execution strategy.â The floating redeployment market will grow, and it will be essential to develop a project approach that includes and controls the risks associated with redeployment. The benefits of vessel modernization will continue to attract a great deal of interest from operators. According to World Energy Reports (WER), the fuselage of the FPSO in the CMHI is under construction in China.
The hull was ordered by SBM Offshore on speculation in December 2019. In its latest FPSO report, WER said Cosco would likely get the Topsides contract. But with COVID-19 appearing to be under control around the world, the FPSO market is showing signs of back in business, with some estimates suggesting the market is expected to reach $67 billion by 2027, supported by a robust backlog – with forecasts of 20 FPSO awards for 2021 and 2022. As of December 31, 2020, the company employs approximately 4,570 people worldwide, spread across our offices in our key markets, operational land bases and offshore fleet. James Moir, Sales Director of the PJV Group, said: “Brazil is a great place for FPSO projects due to its water depths and the resurgence of oil prices! Over the past five years, we have supplied and manufactured valves at over 25 FPSOs. The ability of our teams to work closely with our clients on the technical aspects at every stage – to make their vision a reality – has been an important factor in our success. On the Mero 3 FPSO, there`s no place to go where you won`t be near one of our valves, and that`s a fantastic thing! SBM Offshore is pleased to announce that it has signed a letter of intent with Petróleo Brasileiro S.A. (Petrobras) for a 22.5-year lease and operation agreement with FPSO Alexandre de Gusmão. The unit will be deployed on the Mero field in the Santos Basin off the coast of Brazil, about 160 kilometers from Arraial do Cabo in the state of Rio de Janeiro in Brazil. Equinor`s contract for bacalhau FPSO was also closed in Q2. On June 1, Equinor made a final investment decision for the development of the field that triggered the full scope of engineering, procurement, construction and installation carried out by MODEC.
The company will continue to operate the FPSO in its first year. She carried out the initial technical design and pre-investment on the FPSO as part of a contract signed with Equinor in early 2020. The FPSO hull is already being built by Dalian Shipbuilding Industry Co. in China. Once completed, the FPSO is expected to be one of the largest in the world with an oil processing capacity of 220,000 bbls/d, a gas injection of 530 Mcf/d, a water injection of 200,000 bbls/d and a storage capacity of 2 MMbbl. Regardless of where the FPSO is manufactured and what the regulatory requirements of the region in which it is used are, delays in the construction and commissioning of these complex units are commonplace. Owners and builders are often able to decide whether to leave the unit at the shipyard longer than expected (with possible delays for general damage) or whether to transfer certain aspects of the work to completion while the FPSO is towed into the field. Transmission work entails increased costs and risks for the person responsible for the delay. However, as the delay increases, the pressure to get the FPSO delivered in an incomplete state also increases.
This pressure is particularly pronounced when the buyer was not willing to grant the manufacturer an extension of the time limit. The Libra block, in which the Mero field is located, is the subject of a production sharing agreement with a consortium composed of Petrobras with 40%, Shell Brasil with 20%, Total Energies with 20%, CNODC and CNOOC with 10% each and the public company Pré-Sal Petróleo SA as manager of the production sharing contract. Even with otherwise successful projects, FPSOs rarely leave the yard in a completely finished state. It is not uncommon for the buyer or charterer to carry out certain completion and commissioning work himself. This may lead to disputes as to whether the ship has been delivered in satisfactory condition under the terms of the contract, in particular if the buyer directly enters into new contracts with existing subcontractors and suppliers. Due to the tailor-made nature of the unit, redeployments are relatively rare – with several complex variables at play – an understanding of CAPEX figures is crucial. For example, in smaller areas, capex recovery of a newly commissioned FPSO is likely to be a challenge, and redeploying an existing unit may be a more economically viable option. According to IMA/World Energy Reports, between 25 and 35 units are expected to be available for redeployment in 2021-2025. However, capex savings must be weighed against the backdrop of high operating costs and production risks. The key to a successful redeployment is to eliminate as much as possible the risk to the owners of a new project.
This can be achieved by ensuring that all maintenance, design and specification documentation is accurate and up-to-date to eliminate potential pitfalls. Vessels that have a proven track record and are equipped with an experienced crew that has already operated the vessel also alleviate the concerns of potential customers. The initial design of the container with flexible trays also makes redeployment more attractive. One of the biggest challenges is adding additional layers of contractual complexity. According to Crondall Energy Consultants, conversions tend to perform worse than new construction, both in terms of timing gap (20% vs. . . . .