Energy consultancy group Westwood has released its latest research, which has found that floating production system (FPS) contracts in the offshore sector will rebound to a value of $13bn between 2021 and 2024.
The group noted that while the short-term value of these contracts is expected to fall significantly due to the Covid-19 pandemic – from around $13bn in 2019 to just over $5bn by the end of 2020 – resurgent oil prices could help reverse this decline. With oil prices expected to reach $60 per barrel from 2022, up from $37 per barrel in 2020, the group believes there is cause for optimism within the sector.
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“While the impact of the pandemic has hit FPS engineering, procurement, and construction contract awards significantly this year, the industry is in a much better place than the downturn of 2016 based on order intake so far, as well as the healthy backlogs of FPS contractors stemming from 2017-2019 activity,” said Mark Adeosun, senior offshore analyst at Westwood.
“Over the next five years, Latin America will account for nearly 42% of probable FPS awards, totalling an estimated $24bn,” Adeosun continued. “Brazil is expected to dominate investment, as international oil companies ramp up activity and Petrobras commits to the development of its pre-salt discoveries.”
