October 14, 2022 [Medium] – Energy Transitionrequires much deeper collaboration between countries and industry than ever before.
Before the rise in Floating Liquified Natural Gas (FLNG), the floating and storing phenomenon was already operating in full force, being used for offshore production operations in the oil industry. Floating, Production and Storage Operations (FPSO) are critical to successful offshore development platforms; otherwise, these operations would not be able to sustain effective production in offshore areas around the globe. That’s also why the shift from oil and gas production to renewable sources would potentially cause harm to a thriving offshore energy industry, with multitudes of capital investments and employment at stake.
Nevertheless, as onshore oil and gas production continues to generate greater scrutiny from regulators, investors and conservation activists alike, so then the offshore oil and gas industry has positioned itself to receive massive investments and government subsidies for the short-term outlook of global demand and supply. But this still won’t speak to any solutions for solving maritime threat dynamics, for which this nascent global transport revolution shall face with ongoing fears and uncertainties into the foreseeable future.
Industry trends and analyses reveal that countries throughout Europe and Asia will benefit the most from Liquified Natural Gas (LNG). Two signs of this occuring are VTG Rail Europe’s innovative LNG transport designs via railway network modes and the China National Offshore Oil Company’s (CNOOC) largest LNG storage tank built at a receiving terminal in Yancheng near the metropolitan city of Shanghai.
On the news of the Biden Administration releasing approximately 180mn barrels of oil from the Strategic Petroleum Reserve people in the USA like to think of energy strategy in terms of security and defense. This is misleading from a variety of angles.
I will focus on one aspect: Floating Production, Storage and Offloading Units (FPSO).
Nowadays there’s a much higher level of activity happening in the offshore oil and gas space. According to Offshore Engineer, FPSOs are more attractive in today’s industry because of new players, business models and a lower cost operators than traditional oilfield development services.
FPSO contracts are reportedly on the rise since the end of 2020, including Mero 4 in Brazil, Limbayong in Malaysia and Liuhua 11–1 in China — with the three key players in these areas being Petrobras, Yinson and CNOOC. One reason for the rise in FPSOs is that offshore drilling in Southeast Asia has gained a lot of momentum in 2022, such as a big discovery from Thailand’s PTTEP in an offshore Malaysia block.
As a result, business partnerships in this space are growing too. Petrobras and Yinson signed a letter of intent on February 8, 2022 providing FPSO contracts worth $5.2 billion. While CNOOC and Petrobras signed a Production Sharing Contract (PSC) for $2.12 billion in Brazil’s Buzios field on March 8, 2022.
The Buzios field is significant. As there are already four FPSO units in operation there, with six more planned by 2026, this area is the prime driver for Brazil’s strategic plan to have all FPSO contracts held at a firm price by 2025. This plan occurs under the backdrop of China’s Sinopec reporting its largest profits from crude oil production since 2011.
The reason I’ve been focusing on Brazil, China and Southeast Asia is to drive my point that while most Americans view oil and gas as a energy security and defense issue, other countries are viewing offshore oil and gas production as a major driver of their economic growth going forward — Brazil’s strategic plan is an indication to this fact.
With investments to the tune of $84 billion by Petrobras to develop technologies conducive to FPSO, the expansion of this market is a long-game strategy for an offshore energy space that is becoming a widespread, massively internationally-integrated market. Business is good now, but there are certainly going to be a wave of maritime threat dynamics for these companies operating and transporting in offshore areas — there’s going to be an unprecendented level of FPSOs.
Podcast by Monroe Mayfield
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