The deepwater market is rapidly returning to pre-COVID-19 activity levels, and the recovery appears to be gaining strength, according to a recent in-depth analysis completed by International Maritime Associates (IMA) and World Energy Reports (WER).
“Lots of green shoots have appeared,” says Jim McCaul, head of IMA/WER. “Oil inventory has been brought down to seasonal average, crude remains in the mid-$60s, bullish forecasts are being heard from key industry players and an upward trend in issuance of equity and debt by major upstream companies suggests E&P spending is returning.”
Driving momentum are production curtailments by OPEC+ and rising oil consumption as the global economy unevenly emerges from the COVID crisis. The result is a rebound in the production floater market. Four production floater contracts have been placed since beginning of the year and contracts for approximately 20 more units are poised to more forward over the next 18 months, McCaul says.
“The production floater supply chain has been starved for work since upstream operators abruptly stopped spending on capital projects last year. Management has been under huge pressure by investors to focus on building cash reserves,” McCaul says. “With the market rebounding, our recent discussions with key operators shows a growing intent to refocus on developing new production sources.”
McCaul adds, “The need to replace reserves will trump cash accretion as the global economy comes roaring out of the pandemic over the next 12 to 18 months.”
IMA/WER’s floating production report has up-to-date details for more than 200 floater projects in the planning stage. Around 55% of these envisage use of a floating production, storage and offloading unit (FPSO). Another 10% will require a production semi. The rest are liquefied natural gas (LNG) and floating storage projects. The report also has details for 44 production or storage floaters on order, 308 floating production units in service and 43 production floaters available for redeployment contracts.
For more information about the IMA/WER report and database, visit www.worldenergyreports.com or contact Rob Howard at +1 561 732 4368 or Bailey Simpson at +1 832 289 5646.