Oil and Gas News

FPSO sector braces for coronavirus impact

Rystad Energy has forecast that due to the coronavirus outbreak, floating production, storage and offloading (FPSO) vessels that are under construction in China, South Korea and Singapore will be delayed due to staffing and supply shortages in these countries.

In total, 28 FPSO vessels are under construction, with 22 being built at shipyards in these countries, which will in turn delay project deliveries by at least three to six months.

Furthermore, of the 28 FPSOs being built globally, 15 are in China, seven are under construction in South Korea and a further seven in Singapore.

Rystad Energy expects delays to increase to nine or 12 months if the virus escalates, meaning companies could face a 30 per cent delay due to the average development time for an FPSO is 36 months.

Many Chinese workers received a holiday extension in early February after the Chinese New Year, to limit the spread of the coronavirus.

However, Rystad Energy experts expect projects may still have to contend with 3-50 per cent fewer work hours when workers return.

Supplies are also predicted by Rystad Energy to delay as delivery of bulk materials, modules and equipment is hampered by transportations restrictions.

In addition, oil prices have already dipped below the $US50 ($76) barrel threshold and could fall further if OPEC does not implement additional supply cuts.

“Although operators and contractors are looking into ways to make up for some of the time that will be lost by fast-tracking other stages of development, we anticipate first oil or gas for these projects will face clear delays,“ Rystad Energy partner and head of oilfield service research Audun Martinsen said.

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