Brazil will lead global growth in the Floating Production, Storage and Offloading vessel (FPSO) industry despite the country’s national oil company, Petrobras, recently facing allegations of corruption, according to research and consulting firm GlobalData.
Petrobras registered its biggest ever loss in 2014, partly due to the write-down resulting from the corruption scandal, which in turn resulted in spending cuts on its future projects.
GlobalData’s report states that despite the challenges, Brazil has spearheaded recent growth in the global FPSO industry, with the country deploying 17 FPSOs between 2009 and 2014.
Adrian Lara, GlobalData’s senior upstream analyst, said: “Petrobras’ strategic plans in 2013 and 2014 had almost 40 FPSOs deployed in Brazil through 2020. Based on the company’s latest plan, there are currently seven FPSOs still on time for delivery, whereas 11 have had their delivery date moved back a couple years and about 12 FPSOs are now expected after 2020.”
While Petrobras is planning to spend $108billion, or 83% of its total capital expenditure, on the exploration and production sector as part of its 2015-2019 Business and Management Plan, corruption allegations have hampered its ability to execute the planned projects, including those involving FPSOs.
Lara comments: “Planned projects have been affected in large part by the ongoing investigation into corruption. In particular, domestic shipyards have been hit hard.
“Sete Brasil was set to build 29 offshore rigs for Petrobras but has scaled back to 15. The uncertainty around when and how many rigs will be available will have a knock-on effect on FPSO delivery dates.”
Despite these challenges, Petrobras plans to prioritise oil production projects focusing on sub-salt resources and will deploy and operate a higher number of FPSOs than any other company in the world by 2019, according to the report.
Matthew Jurecky, GlobalData’s head of oil & gas research and consulting, concludes: “FPSOs are an ideal development option for offshore oil fields given current uncertain oil prices, as they can easily be scaled up if the market improves, or scaled down to maintain economic viability despite low oil prices.
“For example, the Sea Lion development in the Falkland Islands is progressing through reducing the initial scope despite being a frontier project.”