The outlook for oil prices has recently turned from bearish to bullish, mainly due to escalating tensions in the Middle East. As conflicts in the region intensify, it is becoming increasingly difficult for suppliers and buyers across the oil and gas supply chain to plan effectively for 2025. While there may be short-term challenges in the world of project permitting and contracting, floating production is pushing the storage and offloading (FPSO) sector to a front-and-center position in future offshore oil and gas production. We are undergoing significant changes to ensure this.
FPSO market growth and regional trends
The FPSO market is expected to see a 50% increase in investments related to greenfield ground equipment investments from $6 billion to $9 billion during 2023, with this momentum expected to continue through 2024. This growth is primarily concentrated in South America, particularly Guyana and Brazil. Pre-salt fields are an area where some of the largest FPSO projects are being considered due to large oil reserves in deepwater offshore fields. Several new FPSO contracts have been signed and many vessels are currently under construction. These include large FPSOs with a production capacity of over 200,000 barrels per day, which will significantly increase global oil production.
Over 10 years, FPSO capital investment is expected to exceed $70 billion, approximately 85% of which will be allocated to projects in South America, Africa, and Asia. The scale of FPSO projects planned in these regions highlights their strategic importance in the global energy landscape. More than 90 FPSO projects are expected to be approved between 2021 and 2030, highlighting the global oil and gas industry’s increasing reliance on floating production equipment .
Technological advances and carbon reduction
As offshore oil and gas production expands, carbon dioxide (CO2) emissions from fields targeted by FPSO infrastructure are expected to increase by 27% by 2030. This is a serious concern, especially as oil majors face increasing pressure to comply with environmental regulations and regulations. Reduce overall emissions. Several new technologies are being integrated into FPSOs to reduce carbon intensity. For example, combined-cycle gas turbines are being deployed to harness waste heat to improve power generation efficiency, and closed-flare systems recover gas that would otherwise be flared and reinject it into the production process. Additionally, post-combustion carbon capture technologies are gaining traction, but face challenges due to space and weight constraints on top of FPSOs. Efforts to reduce the carbon intensity of FPSO operations are important not only for regulatory compliance but also to ensure the long-term viability of offshore oil and gas production.
The road ahead
In summary, the FPSO sector is at a critical juncture. Investments are surging, particularly in key regions such as South America, Africa and Asia, which are expected to be the main drivers of future oil production growth. At the same time, the industry is also grappling with the environmental impact of its activities. Efforts to implement decarbonization technologies and improve operational efficiency reflect the industry’s growing awareness of the need for sustainable practices. As the market continues to expand, the ability to balance increased production with environmental management will determine the future of FPSO projects around the world.
Written by Oddmund Føre, via Rystad Energy
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