FPSO Vessels and Equipments Market to rise with a strong CAGR of 11.80 by 2026

FPSO Market - Snapshot

A floating production storage and offloading (FPSO) vessel is a type of floating production system used for offshore production, storage, and offloading of oil and gas. Generally, an FPSO vessel is a converted oil tanker or a newly constructed unit. An FPSO is often similar in appearance to a ship and is equipped with production and processing facilities onboard. Furthermore, FPSOs consist of offloading facilities for the purpose of transporting processed oil and gas to onshore receiving facilities through a shuttle tanker. The FPSO market is expected to expand at a rapid pace during the forecast period due to rise in investment in offshore oil and gas exploration, especially in deep-water (500 to 1,499 meters) and ultra-deepwater (1,500 meters and above) areas. The depletion of existing oil and gas fields is leading to a rise in concerns regarding the exploration of new oil and gas fields in a bid to meet energy requirements in the near future. Due to this, oil and gas exploration companies have pushed the exploration of oil and gas from onshore to offshore areas, which, in turn, is driving expansion of the FPSO market. Furthermore, large investments and technical challenges involved in the installation of fixed production platforms in remote locations is boosting the FPSO market. Additionally, the ability of FPSOs to sustain harsh working environments is driving demand for them from the oil and gas industry across the globe.

High Capital Investment is a Key Restraint of the Market

The FPSO industry is capital intensive in nature. Construction and building of a new FPSO unit requires high initial investment and substantially large financing. Building a new FPSO costs approximately US$ 2.5 Bn to US$ 3 Bn. However, the cost of conversion of an oil tanker is approximately between US$ 1.5 Bn and US$ 2.0 Bn. Additionally, the cost of operation, testing, and deployment add up to the total investment in an FPSO vessel. Furthermore, factors such as rising cost of materials and labor due to inflation is further affecting the return of investments (ROI) of FPSO operators. All these factors are likely to restrain the FPSO market during the forecast period.

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Tie-ups with Various Players in the Offshore Industry for Accelerating Development of FPSOs

An FPSO building project involves extensive engineering, procurement, construction, and commissioning. Key players in the FPSO industry strategically partner with vendors, yards, and key technology providers for delivering large projects of floating production systems, including FPSOs. Increase in focus on collaboration and strategic partnerships among various players is creating opportunities for advanced service providers of FPSOs and faster deployment of new FPSOs.

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Latin America Held a Major Share of around 30% in the Global FPSO Market in 2017

Based on region, the global FPSO market can be divided into North America, Latin America, Europe, Asia Pacific, and Middle East & Africa. Latin America dominated the global FPSO market in 2017. This is primarily due to the presence of a large number of FPSOs in the region. Major offshore fields located on the Brazilian coast include Santos, Campos, and Espirito Santo basins among others. Expansion in the FPSO market in Brazil is attributed to the increasing investment in exploration of deep water areas in the region. Thus, Latin America accounts for a major share of the global market. Latin America is key player in the FPSO market, followed by Middle East & Africa, Asia Pacific, North America, and Europe.

Global FPSO Market dominated by Several Players

Key players operating in the global FPSO market are MODEC, Inc., SBM Offshore N.V., BW Offshore, Bluewater Energy Services B.V., Bumi Armada Berhad, Yinson Holdings Berhad, and Teekay Corporation.

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