FPSO Market Research Report

Floating Production, Storage and Offloading (FPSO), a sub sector of the Oil and Gas Industry has evolved over the past few decades. Rising demand for oil products and depleting oil reserves have resulted in an enormous increase in offshore oil and gas exploration, at present more than a third of oil is being produced offshore. FPSO is the most preferred floating solution for offshore oil production, since it provides two key benefits including relocation after depletion of the field and storage capacity.
An FPSO can either be built from scratch or else a vessel can be converted into an FPSO, former is more preferred method of manufacturing an FPSO, however, the latter option made it easy for shipping companies to enter into the market. The FPSO manufacturers either provide an FPSO on charter basis for a period of 5 to 20 years or else they provide operation and management (O&M) services along with chartering the FPSO. Leasing an FPSO secures the oil producing companies from risks of asset exposure and revenues are generated to the lessor on a day-rate basis, which depends upon the capacity of the FPSO.
At present, the FPSO market is very fragmented and is set to see more consolidations in near future. Currently there are more than 100 prospective FPSO projects in line, where key oil and gas companies might seek an entry into the market though consolidation.
The key drivers fueling growth in the FPSO market includes factors such as:
• Deepwater oil exploration and production (E&P)
• Rising demand of oil, mostly from developing economies
• Depleting easily accessible oil reserves
• More marginal oil fields
These factors have played a pivotal role to provide an exponential growth to the FPSO market. The FPSO market is being estimated at approximately USD 9 bn in the current year, the market has grown at a CAGR of more than 15% since 2006. The FPSO market is believed to have bottomed in the year 2010, when there were very few deliveries, post recession.
FPSO market is regaining the pre recession growth rate and it is expected to cross the level USD 16 bn by 2014. This enhanced demand is mostly expected to come from regions such as Southern America and Southern Africa.
The FPSO market seems to be unbeatable with rising energy demand and depleting oil reserves. Less preferred (being expensive), unconventional sources of energy and unavailability of more economical and flexible technology for oil production promises unprecedented growth to the FPSO market.