Newbuild FPSOs Are Out Of Fashion - Africa’s premier report on the oil, gas and energy landscape.

Newbuild FPSOs Are Out Of Fashion

Construction of brand new Floating Offshore Storage and Offloading (FPSO) facility is currently not the default choice for greenfield development in deepwater West Africa.

Four deepwater development projects  in the region, meant for commissioning between late 2015 and 2017 have, as centerpiece, the conversion of very large crude carrier (VLCC).

The TEN project in Ghana, East Hub and Koambo in Angola and Etan-Zabazaba in Nigeria are all going to be produced with FPSOs that were once VLCCs. Collectively, these projects-each of them a cluster of fields- will produce 500,000BOPD at plateau at some point between 2016 and 2018. A notable exception is the Egina field off Nigeria. Last year, TOTAL announced that the field would come on stream in 2017, but the company and the FPSO contractor have been dragged to court over local content issues.

The growing preference for converted VLCCs is in contrast with the trend in the late 90s to early noughties, when the earliest deepwater discoveries in the region were being sanctioned for development.

TOTAL started the whole deepwater newbuild FPSO construction spree in the region with Girassol FPSO, delivered in Angolan waters in November 2001. TOTAL started the whole deepwater newbuild FPSO construction spree  in the region with Girassol FPSO, delivered in Angolan waters in November 2001.  With a breadth of 60 metres and length of 300 metres, it was proclaimed as the largest FPSO on the planet.

Then the company promised the industry that Dalia, its next newbuild FPSO, was going to be even bigger. ExxonMobil opted for a converted vessel for its  Xikomba FPSO, which was also smaller than the Girassol FPSO. But the company’s next project, the Kizomba A development chose a newbuild FPSO and first oil came online in August 2005. Next was Bonga, Nigeria’s flagship deepwater, which also sanctioned a new build FPSO, with the field coming on stream in November 2005, three months after Kizomba A. ExxonMobil’s Erha Field, also with a newbuild FPSO, started production in March 2006.

Newbuild FPSOs were sanctioned for Chevron operated Agbami, which came online in 2008 and Akpo Field, from where production started in March 2009.

The suspicion that scale is a determining factor in the choice of newbuild or converted FPSO is annuled by the example of TOTAL’s option of a converted VLCC to produce such a large cluster of fields as Koambo (with capacity of delivering up to 230,000BOPD).

Analysts say that these choices are more determined by ‘time to market’, now than at any other time. Whereas, at some point, sizeable deepwater field developments were seen as opportunity to try new technology, the industry has learned. “The choice is really between ‘what we must have’ and ‘what do we like to have’ and CAPEX is the only way to absorb the vagaries of lower oil prices if and when such arises”. The point is, however made that “newbuild FPSOs are more versatile with higher safety levels and lifespan than those built by converting an existing vessel.

Tullow Oil can be credited for this current fad for converting VLCC’s to FPSOs for large sized field development. In October 2008, the British explorer awarded the Japanese contractor MODEC the engineering, procurement and construction contract to provide a floating, production, storage and offloading (FPSO) vessel for the Jubilee field. MODEC converted the  tanker vessel Ohdoh for the Jubilee field and christened FPSO Kwame Nkrumah MV21. Production commenced in December 2010. The facility is producing around 105,000BOPD.

Tullow sanctioned the second field development TEN (Tweneboa, Enyenra, and Ntomme fields) in late 2013. The company awarded the contracts for the supply, charter and lease, operations and maintenance of a Floating Production, Storage and Offloading (“FPSO”) vessel to the same contractor: MODEC, the Japanese contractor. The Centennial Jewel is in the process of conversion into a Floating Production, Storage and Offloading (“FPSO”) vessel at the Jurong Shipyard in Singapore. Production is expected in 2016.

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