Published On : 11 Dec 2018
Floating production storage and offloading vessels or FPSO are production systems used for processing equipment and storage of oil and gas. The oil and gas processing equipment are installed in FPSO’s and later upstream oil and gas is processed. An FPSO resembles with a ship and is equipped with processing and production services onboard. Adding to this, they consist of offloading functions meant for transporting processed oil and gas to onshore facilities via a tanker. The global FPSO market is anticipated to grow on the back of rising investments in oil and gas exploration. Many companies have shifted the onshore exploration of oil and gas to offshore as Companies have witnessed several concerns for the exploration of oil and gas.
As the demand for FPSO is rising, many oil and gas companies prefer small groups of gasoline reserves. These reserves known as marginal reserves are established for enhancing economies of scale.
Global FPSO Market by Region
As per regions, the global FPSO market can be geographically divided into Latin America, North America, MEA, and Asia Pacific. Latin America dominated the market in the year 2017. This is majorly due to the presence of numerous FPSO players. Brazil’s expansion of FPSO attributed to the growing investments in the exploration of deep-water areas. Hence, Latin America is estimated to dominate the FPSO market in the forecast period. This region, followed by other areas accounts for the majority of market share.
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Drivers and Restraints Affecting the FPSO Market
The factors fuelling the growth of the FPSO market include rapid expansion in oil and gas exploration, and high production in offshore and deep-water areas. Increasing consumption of oil and gas is especially in transportation and power generation sectors have forced companies to discover gasoline reserves. There is an emerging requirement for integrated systems in ultra-deepwater reserves to overcome extreme circumstances. Owing to this factor, the FPSO market is likely to augment the growth in the upcoming years. Further, the market is estimated to gain considerable share in ultra-deep offshore areas owing to the efficient production method and cost-effectiveness. Challenging environments and marginal fields are some other factors supporting the expansion of the FPSO market. Various initiatives taken by the government are projected to expand the upstream oil and gas industry across the globe.
On the downside, some factors negatively affect the growth of the FPSO market. Building and construction of an FPSO unit are capital intensive. Constructing an FPSO involves massive financing; however, the cost of transforming an oil tanker is relatively low. Adding to this, testing, deployment, and operation cost amounts to the total FPSO vessel investment. Besides, other factors such as the high cost of material, less availability of labor are affecting the return on the investment made by operators of FPSO. Therefore, all the factors mentioned above are projected to hamper the growth of the FPSO market within the forecast period.
The global FPSO market covers some of the leading key players, which include Bumi Armada, Berhad, BW Offshore, Bluewater Energy Services B.V, COSCO Shipyard Group Co. Ltd, Yinson Holdings Berhad, and MODEC, Inc. among others.
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