Due to Rising Demand for Crude Oil and Continuous Discoveries of New Offshore Reserves Will Drive the Floating Production System Market
- Himanshu Patni
- March 30, 2022
- ENERGY & POWER, NEWS
- Floating Production System Market, Floating Production System Market growth, Floating Production System Market share, Floating Production System Market size
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Global Floating Production System Market is expected to grow at a CAGR of ~7% between 2021-2027. Floating production systems are critical tools for offshore oil and gas developments that rely solely on them. They are used in offshore oil and gas production at all depths for drilling and exploration. The market for floating production systems is directly dependent on offshore drilling activities taking place around the world. The rising demand for crude oil, as well as the potential for oil and gas sources in offshore areas, are compelling companies to drill to great depths and enter deep and ultra-deep waters. However, the offshore energy market is in flux. Economic effects from the COVID-19 pandemic, changing global attitudes toward energy, and the growing importance of Environmental, Social, and Governance (ESG) matters have disrupted the ways that companies do business. Although the energy transition is already underway, offshore oil and gas will continue to play a key role in providing energy for the world. According to the U.N., global population is expected to grow to 9.7 billion by 2050, with a large portion of population growth concentrated in the developing world. Thus, global energy companies across the world are adapting to the changing landscape, which will impact the nature, pricing and financing of offshore oil projects.
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Offshore power is an important part of the world’s oil and natural gas supply and could be an increasingly important source of renewable electricity. The resources are enormous, and offshore projects are proving their worth in a changing market and in a political context under various stresses on the world’s oceans. For instance, global offshore gas production in 2016 was 17.5 mboe/d and according to IEA’s New Policy Scenario it is expected to increase to 29.6 mboe/d in 2040. Therefore, with increasing production of oil and gas and with high investments in offshore energy industry would propel the market. However, fluctuating crude oil prices has forced oil companies to cut spending which eventually led to delays or cancellations of contracts, which has reduced the capacity utilization and further investments of these systems which hampered the market growth.
The oil supply/demand imbalance is occurring in tandem with the reduced demand for chemicals and refined products as a result of industrial slowdowns and travel restrictions caused by COVID-19. As a result, the short- to medium-term outlook for high-cost producers, smaller operators, and companies with significant debt appears to be more difficult than ever. Various oil and gas companies, and chemical companies are responding by reducing capital and operational expenditures, which will trickle down to suppliers and oil service companies.
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As per the IEA, the pandemic has forced rapid changes in behavior: from new working-from-home models to cuts in business and leisure air travel. At the same time, more and more governments are focusing on the potential for a sustainable recovery as a way to accelerate momentum towards a low-carbon future. The outlook for oil demand has shifted lower as a result of these trends, raising the prospect of a peak sooner than previously expected if governments follow through with strong policies to hasten the shift to clean energy.
On the basis of type, the market is categorized into FPSO, TLP, SPAR, and Barge. In 2020, FPSO to hold majority share in the global market, owing to its additional function of storage of produced oil. A floating production storage and offloading (FPSO) unit is a floating vessel used by the offshore oil and gas industry for the production and processing of hydrocarbons, and for the storage of oil. The demand for oil and gas production has always been on rise, which led to increased exploration activities in offshore. This, in turn, is expected to act as an opportunity for the market over the forecast period.
Based on water depth, the Floating Production System Market has been bifurcated into Shallow Water and Deepwater & Ultra-Deepwater. Among these, Deepwater & Ultra-Deepwater category to witness strong growth during the forecast period. This is mainly in account of the increasing demand for global energy, and the rise in the number of investments from operators for deep-water drilling activities.
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For a better understanding of the market adoption of Floating Production System Industry, the market is analyzed based on its worldwide presence in the countries such as Brazil, China, United Kingdom, India, Nigeria, Malaysia, Australia, Guyana, Canada, and Rest of World. During the forecast period, Brazil is expected to account for major deployment of FPS. Brazil is currently witnessing an influx of international E&P companies and is set to award seven more FPSO awards in 2020, thereby bringing the country’s tally to more than one-third of the awards anticipated globally in 2019 and 2020. The FPSO market will expand rapidly as a result of increased investments in offshore exploration and development operations, as well as advancements in deepwater technology. According to the International Energy Agency (IEA), yearly capital investment on offshore oil and gas production operations in Brazil alone would exceed USD 60 billion by 2040.
Some of the major players operating in the market include Keppel Offshore and Marine Ltd., Malaysia Marine and Heavy Engineering SDN BHD, Samsung Heavy Industries Co. Ltd., SBM Offshore NV, Bumi Armada Berhad, Hyundai Heavy Industries Co. Ltd., Mitsubishi Heavy Industries Ltd., TechnipFMC PLC, MODEC Inc., and McDermott International Ltd.
Floating Production System (FPS) Market Segmentation
Market Insight, by Type
- Floating Production Storage offloading (FPSO)
- Tension Leg Platform (TLP)
- Barge and Others
Market Insight, by Water Depth
- Shallow Water
- Deepwater and Ultra-Deepwater
Market Insight, by Country
- United Kingdom
- Rest of World
Top Company Profiles
- Keppel Offshore and Marine Ltd
- Malaysia Marine and Heavy Engineering SDN BHD
- Samsung Heavy Industries Co. Ltd
- SBM Offshore NV
- Bumi Armada Berhad
- Hyundai Heavy Industries Co. Ltd
- Mitsubishi Heavy Industries Ltd
- TechnipFMC PLC
- MODEC Inc.
- McDermott International Ltd.