The vast rise in offshore exploration activities, especially across mature oil and gas reserves across regions such as North America and Europe have led to promising growth avenues for companies operating in the global floating, production, storage, and offloading (FPSO) market in the recent years. The rising set of growth opportunities has brought in several players in the market, making it competitive, observes Transparency Market Research in a recent report. Some of the leading companies in the market are Bumi Armada Berhad, SBM Offshore N.V. Bluewater Energy Services B.V., Teekay Corporation, and Hyundai Heavy Industries Co., Ltd.
According to the report, the global floating, production, storage, and offloading (FPSO) market is expected to expand at an impressive CAGR of 16.20% from 2015 to 2021, rising from a valuation of US$15.8 bn in 2014 to US$43.3 bn by 2021.
Americas to Witness Robust Growth in Coming Years
In 2015, the combined America market (North America and Latin America) dominated the worldwide FPSO market and is anticipated to maintain the lead through 2021, fueled by the development of new oilfields in the region and the surge in investments in the exploration of offshore oilfields in Brazil. Africa is projected to witness strong growth over the next five years thanks to the rising demand for the installation of floating, production, storage, and offloading units in the fields of Ghana, Angola, Guinea, and Nigeria. On the basis of type, the segment of converted FPSO held the dominant share in the overall market in 2014.
Massive Rise in Offshore Exploration Activities Spell Growth for Market
The promising growth prospects of the market can be chiefly attributed to the massive rise in offshore exploration activities in the oil and gas sector and the rising investments towards these activities. The depletion of existing onshore oil and gas fields in the recent years has led to this increase in deepwater and ultra-deepwater explorations, a trend expected to remain strong in the coming years as well. Funds pouring in for offshore exploration of oil and gas fields are expected to remain steady in the coming years as well, with activities focused in areas such as Brazil, the North Sea, and West Africa expected to gain traction. Other factors such as support from the governments in the form of incentives, the promising rise in the upstream oil and gas industry, and the overall global surge in consumption of oil- and gas-based products are also expected to drive the market.
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Capital Intensive Nature of FPSO Activities a Key Restraint to Market Growth
Owing to its capital intensive nature, the global FPSO market is constantly in need for vast financing and high initial investments for the construction of new FPSO units. However, the cost of the conversion of a surplus aging hull or oil tanker can turn out to be a mere half of the estimated cost required for setting up a new FPSO unit. The total investment in a FPSO unit also includes costs related to deployment, testing, and operation. Thus oil and gas companies are favoring converted FPSO units over new ones. The return on investment of FPSO operators is further affected by the high cost of labor and materials brought on by inflation. These factors could hamper the growth of the global FPSO market to a degree.