Bumi Armada's CEO Eyes FPSO Opportunities in India

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Bumi Armada CEO believes India offers exciting growth opportunities for companies serving the floating production, storage and offloading market.

Malaysia-listed Bumi Armada Berhad’s CEO Hassan Basma sees potential demand for as many as 30 floating production, storage and offloading (FPSO) vessels off India, as state-owned Oil and Natural Gas Corporation Ltd. (ONGC) ramps up cluster developments of oil and gas fields.

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Hassan Basma, CEO of Bumi Armada Source: Bumi Armada Berhad

 

Hassan described India as “a good address” for FPSO contractors with numerous “clusters of small fields” in ONGC-operated offshore blocks waiting to be commercialized.

Promising FPSO Market in India

Subject to regulatory approvals, the Bumi Armada CEO expects about 30 FPSOs will be required off India in the next five years.

Without identifying specific field locations, he flagged three FPSO requirements already on the horizon – one for gas and condensate production and two others separately for a gas development and an oil project.

ONGC is understood to have already reached out to Bumi Armada and other FPSO contractors for at least one production floater to be tendered out soon under the phased development of field clusters in Block KG-DWN-98/2 in the Krishna Godavari basin off India’s east coast.

Block KG-DWN-98/2 is home to 11 discoveries including eight gas fields – A1, D-1, E-1, G-4, N-1, R-1, U1 and W1 – and oil finds, G-2, Kanakadurga, Padmawati and G4-6.

A field development plan (FDP) has been submitted for a phased development aiming at first gas in 2018 followed by oil in 2019, ONGC officials were reported as saying in Indian press.

Regulatory greenlight for the FDP is projected for 2015.

The FPSOs in the pipeline for India’s offshore developments will likely be similar in scale to the Armada Sterling II FPSO due to sail away within weeks from Singapore’s Keppel Shipyard for the Cluster-7 oil and gas project off India’s west coast, according to Hassan.

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Armada Sterling II FPSO Source: Bumi Aramada Berhad

The newly converted Armada Sterling II FPSO, which is equipped to produce 26,500 barrels of oil per day (bopd) and store up to 510,000 barrels of crude, also boasts 60 million cubic feet per day of gas compression capacity.

Most of the gas extracted will be exported to shore with minimal volumes set aside for re-injection, according to Hassan.

Armada Sterling II is the first FPSO to be installed with an internal turret fully engineered in-house at Bumi Armada.

The delivery of the internal turret put Bumi Armada on par in terms of technical capabilities with the top three FPSO contractors in the world, Modec International Inc, SBM Offshore NV and BW Offshore, Hassan said.

Set to go on a nine-year fixed term lease plus options for seven annual extensions at the Cluster 7 field development comprising the B-192, B-45 and WO-24 discoveries, Armada Sterling II is Bumi Armada’s second FPSO off India.

Its first FPSO off India, Armada Sterling I, is now producing 30,000 barrels per day of crude and ramping up to 40,000 bopd of output at ONGC-operated D-1 field development, according to SP Armada, a joint venture between Bumi Armada and Indian conglomerate, Shapoorji Pallonji Group.

Bumi Armada has in turn, returned to Keppel Shipyard Limited for the conversion of the two FPSOs.

The conversion of Armada Sterling II called for fabrication of over 6,000 tons of topsides modules, which were partially carried out at Dyna-Mac and Asia Offshore in Singapore.

Bumi Armada has recently contracted Keppel to convert two further FPSOs for Eni S.p.A.’s Block 15/06 East Hub and Enquest plc’s Kraken projects off Angola and the United Kingdom, respectively.

Bumi Armanda’s Bid Pipeline

Bumi Armada has several FPSO contracts in its bid pipeline that could be potentially awarded prior to the scheduled deliveries of the East Hub and Kraken FPSOs in 2016.

The Malaysian FPSO contractor is reported to be among the final shortlisted bidders for two floaters destined for Eni’s Etan and Tullow Oil plc’s Kudu FPSOs off Nigeria and Namibia. While decision-making could be slow due to an election in Nigeria, project watchers expect Tullow Oil to make a call soon on the Kudu FPSO contract.

Bumi Armada has a third bid lined up against Modec International Inc. and Yinson Holdings Berhad for Eni’s Sankofa-Gye Nyame FPSO off Ghana.

With greenfield developments slowing down as oil companies reduce exploration and production expenses, Hassan expressed optimism that Brazil will buck the trend and press on as state-owned Petrobras has announced an ambitious target to more than double oil production to 5 million barrels per day by 2023.

Bumi Armada was edged out by a small margin in a joint bid with Brazil’s UTC Engenharia S.A. for Petroleos Brasileiro S.A.’ Libra FPSO contract against an Odebrecht Oil & Gas-Teekay Offshore Partners L.P. consortium, but Hassan hinted the firm will submit competitive bids in upcoming Brazilian FPSO contracts.

Challenge of Local Content

As in Indonesia and Mexico, international FPSO contractors are obliged by local content or cabotage requirements to team up with domestic players to qualify for bid rounds in Brazil.

Hassan warned international FPSO contractors risk losing their relevance in the next 10 to 15 years, having been gradually squeezed out by domestic players in countries with increasing stringent local content policies.

“You will have to compete with the locals: the Mexicans will control Mexico and Brazilians, Brazil,” he elaborated.

On the domestic front, Bumi Armada had already been contending with at least four other what Hassan termed as “cabotage players”, M3nergy Berhad, TH Heavy Industries Berhad, Yinson Holdings Berhad and MISC Berhad.   

The only way to compete with such “cabotage players” in the longer run is to develop “integrated technology and move up the value chain”, Hassan opined.

Besides developing in-house engineering capabilities for turret mooring systems, Bumi Armada has also earmarked $61.4 million (MYR 200 million) from a recent rights issue on the Malaysian bourse to acquire two new subsea umbilicals, risers and flowlines (SURF) vessels.

“We have offered and are willing to offer SURF installation services,” Hassan said.

Bumi Armada has already carried out SURF installation associated with the provision of a leased FPSO for Hoang Long Joint Operating Company’s Te Giac Trang oilfield development as well as the Armada Sterling FPSO supplied to ONGC.

The integrated oilfield services provider is also set to install the SURF package for the Madura BD FPSO recently awarded by Husky-CNOOC Madura Limited. Bumi Armada secured a letter of intent for a fixed term charter of 10-years plus options of five annual extensions from HCML for the supply of a leased FPSO.



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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

G.Jayasankar Pillai  |  October 20, 2014
The right leadership uand the team work of the Armada "Army" is what makes BAE so successful. Commendable Achievements by the Army from the Land conquering the Seas...and getting knots ahead of the rest.
john weaver  |  October 17, 2014
Bumi Armada ,having worked with them on the OYO, their skill sets iwere very good , met schedule John

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