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Bird eye view of a FPSO and drilling platform in the ocean

Navigating the FPSO Landscape: Trends, Projects, and Challenges

1977 marked a sea change for the oil and gas industry. That was when Shell commissioned the Castellon, an oil tanker converted into the world’s first Floating Production Storage and Offloading (FPSO) vessel. The market took off rapidly and there are now over 220 FPSO units either in operation, under construction or in planning.

The reason for this growth is that, thanks to FPSOs, production is no longer limited to shallow fields in water depths of less than 50 metres. It has also been possible to move into deeper waters, further offshore. And the capability for storage at the field makes it possible to produce in areas where cost considerations make it unfeasible to construct export pipelines.

The FPSO market is continuing to experience a period of robust growth. Currently estimated at just over $12 billion, it's projected to increase to over $18 billion by 2029, marking a CAGR of 8.5% over the next five years. This growth is shaped by several key drivers: the ever-growing energy needs worldwide; the increase in offshore oil and gas exploration and production; the need to move production into deep (down to 1,500 metres) and ultradeep (beyond 2,000 metres) waters.

This diverse sector involves not only the design, construction, and operation of these specialised vessels but also encompasses a wide array of associated services. That makes FPSOs a very interesting sector for Brunel as we supply highly skilled professionals for the design and construction side.

In this blog we explore some key trends and notable projects that are shaping the dynamics of the FPSO market and take a closer look at how Brunel is making a difference.

An FPSO and drilling platform in the ocean
Due to the escalating global demand for energy and shallow offshore resources becoming depleted, producers are compelled to move into deepwater or even ultra-deepwater regions.

Current FPSO trends

For FPSOs, one size does not fit all. There are some small units that process less than 20,000 bpd, while mega units can process 250,000 bpd. The most popular designs are ship-shaped, but there are designs that feature circular hulls. While some units are intended to remain permanently in place, others are intended for rapid redeployment at several locations. Construction costs also vary widely from $200 million to upwards of $3 billion.

While the high initial investment needed for this form of exploration and production poses a hurdle to this growth, we expect that advances in technologies and systems will create huge opportunities for the market. In particular, FPSOs are not immune to the impact of the global energy transition. So, there is growing pressure to decarbonize their operations through reduction in flaring, carbon capture and storage and powering vessels with green renewable energy.

Currently, we see a clear market preference for contractor-owned models, which are set to dominate the market. Primarily that’s because this approach offers cost advantages over operator-owned FPSOs or fixed platforms.

Operators typically acquire FPSOs through new builds, vessel conversions, or redeployments. However, redeployments are less common due to the customisation involved, leaving new constructions and conversions as the preferred methods.

With contractor-owned FPSOs, operators can capitalise on economies of scale and fleet optimisation, thereby reducing costs. Additionally, contractor-owned FPSOs are typically available for lease, providing operators – especially smaller ones or those with variable production outlooks with valuable financial flexibility.

Exploring notable FPSO projects

According to the latest report by GlobalData, 66 FPSO projects are scheduled between 2022 and 2027. South America is set to be a dominant region for FPSOs due to increased offshore activity in the likes of Brazil, Venezuela and Argentina.

Here are just a few of the most interesting examples:

  • As an illustration of the contractor model, MODEC has concluded a deal with Equinor for an FPSO vessel for the BM-C-33 block in the Campos Basin in Brazil, with delivery expected by 2027, followed by a year of operational support.
  • P82 FPSO, Brazil: Sembcorp Marine and Petrobras secured a deal worth $3.05 billion for the P-82 FPSO in the Búzios oil field in Brazil's Santos Basin pre-salt area. Scheduled for delivery in the first half of 2026, it will produce 225,000 bpd with storage for 1.6 million barrels.
  • P71 FPSO, Brazil: Constructed at a cost of$525 million by Sembcorp Marine for Petrobas in Brazil, this FPSO commenced oil production in late 2022. It has the capacity to yield up to 150,000 bpd of oil and 6 million cubic metres of natural gas per day.
  • BlackRhino/BlackHawk/Aspital FPSOs, Senegal: Woodside and Petrosen are set to expand their fleet by adding MODEC-built FPSOs. This expansion includes the current Ocean BlackRhino and upcoming Ocean BlackHawk, as well as the conversion of the current Aspital FSPO, capable of producing 225,000 bpd.

Navigating the new challenges of the FPSO industry

As we have already seen, the FPSO sector is wrestling with adapting hydrocarbon operations to sustainable practices while still meeting current energy needs. The process is intensified by the need to attract and keep talent adept in these areas.

Supply chain constraints and shipyard capacities are strained amid these shifts to eco-friendlier solutions, resulting in a ripple effect of project uncertainties. The increased demand for unique components and modification services is causing bottlenecks, compounded by pre-existing backlogs and ongoing disruptions stemming from the pandemic.

Environmental, Social, and Governance (ESG) factors are also playing a major role since the FPSO sector is increasingly prioritising criteria such as reducing ecological impact and enhancing workforce welfare. his is crucial to reflect evolving investor and regulatory preferences.

Brunel’s work within the FPSO industry

Brunel has operated globally in the oil and gas sector since 1995. That has made us a trusted provider of manpower, project and consulting services, and global mobility services to numerous clients working in FPSO projects.

We specialise in supplying highly skilled professionals to project teams, both on the design and construction sides, to assist clients in developing innovative and intelligent plans for new FPSO vessels. Once the project has undergone the approval process, construction begins, and this is where Brunel supplies both key supervisory/management specialists and full project teams. For instance, John Matchett, a Brunel specialist currently serving as a Topside Delivery Manager for an FPSO construction project in Asia, brings over three decades of experience in the oil and gas industry. He is currently tasked with overseeing the successful delivery of topside modules and structures for an FPSO designed to operate at water depths of 2,900 metres.

Moreover, we also offer end-to-end project management, strategic consulting, and specialised technical support, all while ensuring cost-efficiency, risk reduction and streamlined operations. Furthermore, our presence in key energy hubs around the world enables us to seamlessly relocate specialists to project sites, regardless of their location. A prime example of this capability is one of Brunel’s largest FPSO projects in the Middle East.

For the “FPSO Atlanta” redevelopment project, 120 positions needed to be filled in early 2022, and Brunel played a pivotal role by successfully providing 110 personnel. Beyond workforce services and payrolling, we also extended our offerings to include accommodation and ticketing services for transportation management.

Fast forward to 2024, Brunel currently has nearly 210 specialists actively contributing to the project's success. In alignment with the client’s commitment to fostering diversity within their teams, Brunel has ensured the recruitment of a diverse group, representing various nationalities. For instance, the operations team originates from Brazil, with women constituting 28% of the team—a noteworthy achievement considering the male-dominated nature of the field and the project. Kumar Kempa, Client Account Manager at Brunel, notes, “Facilitating roles and delivering comprehensive support promptly is no easy feat. The entire process unfolded seamlessly, with everyone fully engaged. To secure the client's trust, a client-centric approach is imperative. We ensured utmost satisfaction, paving the way for potential future business opportunities”.

Finally, numerous FPSO projects encounter challenges in time management during construction. Delays may result from financial issues, approvals from project partners or governments, and difficulties in securing adequate space within shipyards for constructing FPSO vessel components. Addressing these concerns demands meticulous planning and expertise to minimize the risk of delays. Brunel possesses extensive experience in managing delays arising from financing, approval processes, or supply chain complications. We do this by proactively anticipating and mitigating potential setbacks to ensure the successful completion of projects. Furthermore, our Global Mobility Services ensure timely placement of individuals in the right location, complete with all necessary paperwork, minimising project delays.

What’s next for FPSOs?

In conclusion, the FPSO market is experiencing dynamic growth, driven by technological advances, contractor-led initiatives, and major projects to enhance offshore production capabilities. However, challenges like the energy transition, supply chain constraints, ESG considerations, and time management complexities persist.

ShapeAt Brunel, we are committed to tackling these challenges head-on. With our global reach and extensive talent pools, we serve as a strategic partner in the FPSO sector. As global energy demands continue to rise, the FPSO market will undoubtedly expand, and we remain dedicated to supporting its growth every step of the way.

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