FPSO market set to reach US$16 billion by 2014By Jason WaldieUntil 2008, there were many new speculative players planning to enter the FPSO market.By the time 2009 came around it all rather fell apart.Small-time operations were financing from external debt providers simply because creditmarkets were the tightest that they had been in years. This all led to many of the newstart-up and smaller players exiting the market shortly into 2009.Those that remained and could weather the crisis are still active and are enjoying theresurgent economic upswing. Globally, monetary policy is loosening and we have seenactivity expanding globally from East to West. This has changed the entire scope of thesector as it is now not uncommon to see projects in Brazil financed from Japan orprojects in West Africa being financed from China.Deepwater production is set to double and capex is expected to increase by as muchas 179% by the year 2015, to a decent $205 billion. On the other hand, drilling andsubsea processing emerging will result in a little more than US$74.6 billion for thesector by the year 2015.As a result of the 2008 downturn and subsequent turn of fortunes in 2009 and 2010 wehave seen a slight increase in scrutiny on the part of the private equity sector with respectto the FPSO market, this seems to be the right level of scrutiny.Consequently, the market is now seeing balanced contracting regimes, which was forcedin a way, by the new entrants to the market from the private equity side. Numerous
interviews with dominant players in the industry seem to confirm this feeling andcontinue to reassure us that, on the whole, FPSO projects are returning to pre-2008 leveland a turn of fortunes for the sector is imminent.There was a material decrease in orders since 2009 but it seems that market has bottomedlast year and there is an increasing share of the market which is being leased to FPSOs.The deepwater horizon disaster is unlikely to impact the FPSO sector as the Gulf ofMexico accounts for a small part of the market and in the long term it seems as thoughgrowth will return as the FPSO market is set to reach US$16 billion by 2014.