Middle East Makes Play for FPSOs

By Abdelghani Henni 19 Jun 2014

The Middle East is positioning itself as one of the main markets for building Floating Production and Storage Offloading units (FPSOs) thanks to its proximity to key markets, according to Jim Moffat, CEO of UAE-based oil and gas construction and engineering group Lamprell.

“In terms of building FPSOs, we think that the Middle East offers a very attractive opportunity due to its geographical location, the optimal delivery time, and travel distance,” Moffat said in an interview with JPT. “We are closer to Africa and South America, making the cost and duration of travel less. We also operate in closer time zones to places like London and Houston, where many client head offices are located, allowing for better communication,” he added.

Moffat also said that Middle East yards can also offer a competitive solution in line with many of the Far Eastern yards who have a history of building these products. 

An FPSO unit is a floating vessel used by the offshore oil and gas industry for processing hydrocarbons storing oil. An FPSO vessel is designed to receive hydrocarbons produced from nearby platforms or subsea template, process them, and store oil until it can be offloaded onto a tanker or, less frequently, transported through a pipeline.

Meanwhile, demand for FPSOs units from the Middle East remains moderate compared with the North Sea, West Africa, and South America. “There is a growing demand in the Asian market, also,” he noted. 

Lamprell produced a number of complex modules and turrets for several high-profile FPSO projects and opened the eyes of the energy sector to the industrial capabilities resident in the Emirates back in the late 1990s. “This loosened the virtual lock that the shipyard and subcontractor network in Singapore and Korea had on offshore fabrication and opened the door for other Gulf area yards to get a piece of the offshore construction market,” Moffat said.

The company is also the largest manufacturer of jack-up drilling rigs in the Middle East. Moffat said that Lamprell and Maritime Industrial Services (which was acquired by Lamprell in 2011) are the only yards in the region to have successfully built and delivered new jack-up drilling rigs.

In a news release on 10 June, it was revealed that the accommodation AJ 62 series and CJ 80, announced by the Dubai’s Drydocks recently, are now to be put on indefinite hold. In addition, the CJ 54s that Drydocks are preparing to build for Malta Oil & Gas are also on hold, as Drydocks is still waiting for initial payment. “There are 140 jack-ups ordered and/or under construction in the rest of the world today, so with our nine, we have roughly a 6.5% market share at present. Recent reports, however, indicate that some of the China projects, included in the 140 above, are possibly not getting off the ground,” Moffat added.

Abdelghani Henni is the Middle East Editor for the Journal of Petroleum Technology.