Global FPSO market forecast to hit US$66bn by 2026

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..African oil discoveries driving FPSO demand
New oil field discoveries around Africa, Asia and South America are driving increased demand for floating production storage and offloading (FPSO) vessels around the world.
Despite the lingering volatility of global commodity prices, Africa’s offshore oil and gas industry has continued to expand, opening up more market opportunities for FPSO vessel manufacturers and suppliers.
With more offshore oil and gas projects projected for the continent and more international oil companies being driven to deep and ultra-deep water fields, FPSO manufacturers and suppliers eyeing the continent have reason to remain optimistic in the long term.
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.
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.
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 billion to US$3 billion.
However, the cost of conversion of an oil tanker is approximately between US$1.5 billion and US$2.0 billion. 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.
Africa leads the line with several oil field discoveries in Ghana, Senegal, Egypt, Congo Republic and Nigeria’s Egina oil field where production recently commenced with Total’s newly built $3.3 billion FPSO.
The French supermajor began production at the Egina oil field on December 29. The FPSO unit that was used to develop the ultra-deep Egina oil field is the largest such unit that Total has ever built, according to the French group.

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