Rystad: Coronavirus could delay FPSOs under construction in Asia up to 1 year

Oslo, March 4 - Neftegaz.RU. The outbreak of the coronavirus is set to cause extensive staffing and supply shortages as well as delays on floating production, storage and offloading (FPSO) vessels under construction in China, South Korea, and Singapore, according to energy intelligence firm Rystad Energy.

Rystad said that 22 out of a global total of 28 FPSOs under construction were being built at shipyards in China, South Korea, and Singapore. According to the company, the coronavirus outbreak could delay project deliveries by at least 3 to 6 months.

If the epidemic escalates, the delays could increase to 9 or even 12 months, especially taking into account the restricted time windows for heavy transport, installation and hook-up. The average development time for an FPSO is 36 months, meaning that companies could face a 30 % delay.

Rystad Energy partner and head of oilfield service research Audun Martinsen said: “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.”

At present, 28 FPSOs are under development globally, 15 of which are being built in China. 7 are under construction in coronavirus hotspot South Korea as well as in Singapore, while 6 additional vessels are being constructed elsewhere.

It is not yet clear when the effects of the epidemic will ease, but the situation will worsen in March and the impact of the virus is not limited to Chinese fabrication yards as it affects the entire global service industry.

Oil prices have already dipped below the $50 per barrel threshold and could fall further if OPEC does not implement additional supply cuts. Lower oil prices will result in oil and gas companies scaling down their flexible investment budgets, especially shale operators in the US as well as some offshore exploration and production (E&P) players.

“Our current assessment forecasts that coronavirus could result in global E&P investments falling by around $30 billion in 2020 – a significant hit to the industry,” Martinsen stated, adding that some of these investments are likely to come back in 2021.