Slow Year Ahead for Floating Production as Industry Downturn Bites
To ward off competition from Chinese yards, Singapore yards have to improve their service offerings in the FPS sector and assume more complex projects.
“Jurong is doing the topside integration, the mooring system, so that’s quite a bit step up from their previous type projects,” Boggs said at the forum, citing the $696 million FPSO conversion contract for Brazil’s Libra project that Sembcorp Marine’s subsidiary Jurong Shipyard clinched last October.
Meanwhile, market watchers expect oil companies, FPSO contractors and yards to focus more on strengthening their internal organizations in the current slowdown. In the FPS sector, SBM Offshore has already announced plans to lay off 1,200 workers, while Malaysia’s Bumi Armada Berhad also intends to initiate cost reduction including headcount rationalization.
The lack of new FPS contracts may not weigh heavily on the immediate prospect of ambitious Malaysian firms such as Bumi Armada and Yinson Holdings Berhad after their recent wins, including the latter’s $2.54 billion deal from Eni S.p.A. for Ghana’s Offshore Cape Three Points project in January.
“Yinson has secured one big contract in Africa. Even if there is a lull in FPSO contracts, it won’t be affected for long … Bumi Armada has a lot on their plate now with 3 projects, even if it doesn’t bag any project this year, it is not too big an issue,” Arhnue Tan, an analyst with Malaysia’s Alliance Research told Rigzone.
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