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FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
FPSOs in 2011: Double dip or capacity crunch?
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FPSOs in 2011: Double dip or capacity crunch?

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Kelvin Sam, Analyst at ODS-Petrodata, shared with us the capacity trends and expected 2011 new orders at the 2010 FPSO Congress. …

Kelvin Sam, Analyst at ODS-Petrodata, shared with us the capacity trends and expected 2011 new orders at the 2010 FPSO Congress.

Kelvin will also be speaking at the 12th Annual FPSO Congress. Visit www.fpsoasia.com or enquiry@iqpc.com.sg

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  • 1. FPSOs in 2011 Double dip or capacity crunch?Kelvin SamFPSO Congress 2010
  • 2. Our Company ODS-Petrodata is an independent market intelligence company Established over 30 years ago: 30+ years of historical data. 130 employees including market reporters, specialists and analysts. Offices in Houston, Aberdeen, Oslo, Singapore and Dubai Page 2 Protected by Copyright © 2010 ODS-Petrodata
  • 3. Market Segments are updated every 4 months and new segments are added on an ongoing basisIndustry ConceptualTrends Studies/FEED EPCm FPSO / FSO © BP p.l.c. LNG LNG OnshoreTopsides Liquefaction Regasification ProductionFabrication Facilities Terminals FacilitiesOffshore Offshore Offshore OnshoreHeavy Lift Installation Pipelay Pipelay DSV/ROVSVLine Pipe OCTG Subsea Drilling Fluids EquipmentHeat Gas Oil SandsExchangers Gas Turbines Compressors MiningInspection Helicopter Floaters – SPAR,Maintenance Well Logging Services TLP, Semis...Repair Page 3 Protected by Copyright © 2010 ODS-Petrodata
  • 4. Introduction FPSO contract awards Newbuilds Conversions Redeployments Normally owned Normally leased Normally leased USD 250 – At least USDUSD 0.8 – 2 3-4 years 2-3 years 1-12 months 800 million 50 millionbillion capex construction construction upgrade capex capex Page 4 Protected by Copyright © 2010 ODS-Petrodata
  • 5. Contents 1. Overview 2. Capacity Trends 3. 2011 new orders 4. ConclusionSeptember 28, 2010 Page 5 Protected by Copyright © 2010 ODS-Petrodata
  • 6. Further consolidation needed for leasers Asia-Pacific Brazil Leasers Africa Leasers Europe Leasers Leasers• Aker FP • BW Offshore • Bumi Armada • Bluewater• Berlian Laju Tanker • Maersk FPSO • BW Offshore • BW Offshore• Bluewater • MODEC • Fred Olsen • Maersk FPSO• Bumi Armada • OSX • MODEC • Saipem• BW Offshore • Petroserv • Prosafe Production • Sevan Marine• EOC • Prosafe Production • Saipem • Teekay Petrojarl• M3nergy • Saipem • SBM• Maersk FPSO • SBM• MISC • Sevan Marine• Mitra Rajasa • Teekay Petrojarl• MODEC• Premuda• Prosafe Production• Rubicon• SBM• Sea Production• Tanker Pacific Page 6 Protected by Copyright © 2010 ODS-Petrodata
  • 7. Many regions still fragmented even after BWO/PROD merger FPSO leaser market share by region Size of each region by number of leased FPSOs Page 7 Protected by Copyright © 2010 ODS-Petrodata
  • 8. Improving results could lead to further M&A in 2011Median* FPSO leaser net margins 20% 10% 0%-10%-20%-30%-40%-50%-60%-70%-80%-90% 2007 2008 2009 1H10 *Includes net margins of SBM, MODEC, BWO, Prosaf e Production and Sevan Marine Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd Almost all leasers reporting improved net margins in 2010. Smaller leasers should benefit from consolidation.  Improving access to funding while qualifying them for more projects. Page 8 Protected by Copyright © 2010 ODS-Petrodata
  • 9. 2010 awards already surpassing 2009 levelsFPSO contract awards 25 Redeployments Newbuilds 20 ConversionsAwards 15 10 5 0 2003 2004 2005 2006 2007 2008 2009 2010 YTD Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd  Robust recovery with both large and small projects awarded.  Further 2010 upside with operators tendering for eight more FPSOs. Page 9 Protected by Copyright © 2010 ODS-Petrodata
  • 10. Can the industry handle this recovery? Record order Recovery begins,Increased Costs peak, ? book, rising contractscompetition and projects costs, delivery awarded again,low bids deferred, volatile delays, cost increasedsubmitted oil price overruns competition 2006 2007 2008 – 1H09 2H09-2010 2011 Page 10 Protected by Copyright © 2010 ODS-Petrodata
  • 11. Contents 1. Overview 2. Capacity Trends 3. 2011 new orders 4. ConclusionSeptember 28, 2010 Page 11 Protected by Copyright © 2010 ODS-Petrodata
  • 12. Steel prices are rising againSteel Prices 1000 900 800 700USD per tonne 600 500 400 300 200 100 0 2003 2004 2005 2006 2007 2008 2009 2010 YTD Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd  Price of steel is a leading indicator of FPSO costs.  Steel prices increasing by 13 per cent year-on-year in 2010. Page 12 Protected by Copyright © 2010 ODS-Petrodata
  • 13. Why are steel prices so important?Steel Prices and FPSO costs 300 Steel prices FPSO newbuild costs 250Index 2003 = 100 200 150 100 50 0 2003 2004 2005 2006 2007 2008 2009 2010 YTD Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd  20 per cent steel inflation in 2010= 4 per cent FPSO inflation.  Steel prices normally more volatile than other costs such as salaries. Page 13 Protected by Copyright © 2010 ODS-Petrodata
  • 14. …but we don’t expect major cost inflation in 2011-2012Cost Model - FPSO Y-O-Y Change [USD based] Cost Index (2003=100) [USD based] 25% 250 20% Nominal Index (2003 = 100) 15% 200 Year on Year Change 10% 5% 150 0% -5% 100 -10% -15% 50 -20% -25% 0 2003 2004 2005 2006 2007 2008 2009 2010f 2011f 2012f 2013f 2014f Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd. Source: ODS-Petrodata, Date: August 23, 2010 2010-2014 cost inflation to stay low compared to 2003-2009. Page 14 Protected by Copyright © 2010 ODS-Petrodata
  • 15. Deliveries keeping up with new orders FPSOs under construction 1989-2010 Contractors previously busy with record order book from 2006-2008. Slowdown in 2009 resulted in spare capacity. Page 15 Protected by Copyright © 2010 ODS-Petrodata
  • 16. Shipyards having spare capacityFPSO Shipyard Backlogs 300 250 Index 1Q06 = 100 200 150 100 50 Samsung HI DSME Hyundai HI Keppel O&M Sembcorp Marine 0 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd  Most shipyards have smaller backlogs now.  Hyundai HI is the exception with the company having a record order book. Page 16 Protected by Copyright © 2010 ODS-Petrodata
  • 17. Idle FPSOs can be redeployed next yearIdle/ Available FPSOs with Lease Options 12 10 No extension options Extension Options 8 FPSO 6 4 2 0 Idle 2010 2011 2012 2013 2014 Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd Some idle units ideal for another project.  Falcon FPSO can be used for large developments. Some FPSOs coming off charter in 2010 and 2011. Page 17 Protected by Copyright © 2010 ODS-Petrodata
  • 18. Capacity summary Deliveries still keeping up with new orders.  FPSOs under construction still low New FPSO yards diversifying the supply chain. FPSO buyers can also redeploy existing units. Supply conditions still good for FPSO buyers in 2011 Page 18 Protected by Copyright © 2010 ODS-Petrodata
  • 19. Contents 1. Overview 2. Capacity Trends 3. 2011 new orders 4. ConclusionSeptember 28, 2010 Page 19 Protected by Copyright © 2010 ODS-Petrodata
  • 20. 4Q oil prices are a leading demand indicator?WTI Oil Prices - Fourth Quarter 2008 120 2009 awards 100 Field Operator CountryUSD per barrel spot Shelley Premier Oil UK 80 Aseng Noble Energy Equatorial Guinea Dua Premier Oil Vietnam 60 Kakap ConocoPhillips Indonesia Papa-Terra Petrobras Brazil 40 Te Giac Trang Hoang Long JOC Vietnam Aquila Agip Italy 20 Baleia Azul Petrobras Brazil Huizhou 26-1 CNOOC China 0 Source: ODS-Petrodata Oct-08 Nov-08 Dec-08 Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd Low + volatile 4Q08 oil price = low FPSO demand in 2009 Page 20 Protected by Copyright © 2010 ODS-Petrodata
  • 21. 4Q oil prices are a leading demand indicator? 2010 YTD awardsWTI Oil Prices - Fourth Quarter 2009 Field Operator Country CLOV Total Angola 90 Terang Kangean Energy Indonesia 80 Parque Petrobras BrazilUSD per barrel spot 70 Roncador Petrobras Brazil 60 Macondo BP USA, Gulf of Mexico 50 Tupi Nordeste Petrobras Brazil 40 Cendor Petrofac Malaysia 30 Pagerungan Utara Kangean Energy Indonesia 20 Huntington EON Ruhr Gas UK 10 Athena Ithaca Energy UK 0 Oct-09 Nov-09 Dec-09 Goliat Eni Norway Waimea (OGX-3) OGX Brazil Guara Petrobras Brazil Kitan Eni Australia Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd Source: ODS-Petrodata High+ stable oil price in 4Q09 = high FPSO demand in 2010 Page 21 Protected by Copyright © 2010 ODS-Petrodata
  • 22. We expect at least 15 FPSO awards in 2011Visible 2011 FPSO demand by scope 16 Newbuild 14 Redeployment 12 Conversion List of forecast 15 FPSO awards in 2011 10FPSO 8 6 4 2 0 Asia-Pacific Europe Africa Brazil Protected by Copyright (c) 1986-2010 ODS-Petrodata Ltd  Visible demand tracked 24/7 by a global team of market reporters.  Majority of FPSO projects likely to be conversions/redeployments in Asia and Europe. Page 22 Protected by Copyright © 2010 ODS-Petrodata
  • 23. Annual FPSO capex reaching USD 13 billion in 2014. FPSO capital spending Capital spending to continue increasing. Spending to remain higher even after excluding cost inflation. Page 23 Protected by Copyright © 2010 ODS-Petrodata
  • 24. What will drive a strong FPSO recovery in 2011? Favourable supply conditions - Industry still has spare capacity with FPSO backlog staying low. Lower costs - FPSO costs falling 20 per cent in 2009. - Single digit inflation in 2010 and 2011. Oil prices - Oil prices have to stay high and stable. Page 24 Protected by Copyright © 2010 ODS-Petrodata
  • 25. Contact informationAberdeen Houston Singapore2nd Floor Suite 170 04-30 Nordic European CentreThe Exchange No. 1 3200 Wilcrest Dr. 3 International Business ParkMarket Street Houston, Texas 77042 Singapore 609927Aberdeen AB11 5PJ USA Tel: +65 6890 1616Scotland Tel: +1 832 463 3000 Fax: +65 6890 1624Tel: +44 1224 597800 Fax: +1 832 463 3100Fax: +44 1224 580320Oslo DubaiPostal Address: Postal Address:P.O.Box 1875, Vika P.O. Box 62425NO-0124 Oslo Dubai, UAENorway Office Address:Office Address: Crown Plaza 19th Floor http://www.ods-petrodata.com/Tjuvholmen allé 3, 6th fl. Sheikh Zayed RoadNO-0252 Oslo DubaiNorway United Arab EmiratesTel: +47 22 12 90 60 Tel: +971 4 3117118Fax: +47 22 12 90 61 Fax: +971 4 3326136 Page 25 Protected by Copyright © 2010 ODS-Petrodata

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