For many years, a business venture in the FPSO market could be seen as highly speculative and risky. However, things could be starting to reverse, which in turn can offer a boost in the tanker market. In its latest weekly report, shipbroker Gibson said that “floating production storage and offloading platforms (FPSOs) are having somewhat of a renaissance. After a challenging covid period higher oil prices carried with it a larger orderbook for FPSOs, several of which are due to be delivered this year. FPSOs allow flexibility in deployment and give cost advantages over traditional production infrastructure, and notably, are currently mostly being deployed offshore, relying on tankers for further transport of oil”.
According to Gibson, “Guyana is this decade’s poster child of the successful use of FPSOs. Since late 2019 three FPSOs have been installed off the coast of Guyana, Liza Destiny (120 kbd) and Liza Unity (220 kbd), followed by Prosperity (220 kbd), which are mostly responsible for growing the country’s exports to 620 kbd in 2024. Of this output, around 500 kbd was carried on Suezmaxes, and 100 kbd on VLCCs, largely to Asia, Europe, and the Mediterranean. It was reported this week that the One Guyana with a capacity of 250 kbd has left Singapore and is travelling to Guyana, to start ramping up production in Q2 and Q3 of this year, adding a further 100 kbd to oil production over the year. Two more units, each expected to have 250 kbd of capacity, are under construction and scheduled to start production in 2026 and 2027”.
“Meanwhile, Brazil is looking to mirror this success by bringing four FPSOs, with a total capacity of around 800 kbd online in 2025. These units are slated to contribute 220 kbd of additional supply this year, and most of these barrels are likely to be exported on VLCCs and Suezmaxes as well. As in Guyana, more FPSOs are expected in Brazil for 2026 and beyond, although Petrobras has tempered expectations by announcing additional maintenance and slower than projected ramp up and commissioning of FPSOs Mero 3 and Almirante Tamandare. In the US Gulf, the Mad Dog 2 will bring 140 kbd of capacity online later this year, bringing the total in the Americas alone to seven FPSOs for 2025. With Norway and China as well as several West African countries all adding capacity, and projects awaiting final investment decisions in Namibia and Suriname in the coming years, offshore production and FPSOs are helping to contribute a significant share of supply growth”, Gibson said.
The shipbroker said that “the consequences for dirty tanker markets seem positive. However, the key question of where demand for these supply additions will come from remains, with supply growth projected to outgrow demand growth this year, challenging current OPEC+ plans. As previously reported, predicted demand growth in the Far East could give rise to new tonne mile demand for VLCCs and Suezmaxes. The medium grades from Brazil and Guyana have so far offered a welcome alternative for European refiners to the very light US exports. Yet with demand in Europe set to slow this could push barrels East. Recent sanctions on both Russia and Iran have seen more barrels move from West to East, supporting this notion”, Gibson concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
