Limbayong FPSO charter likely proceed as planned
Contenders to supply the external turret for the FPSO included Bluewater, SOFEC, National Oilwell Varco and London Marine Consultants.
AmInvestment
KUCHING: The Limbayong floating production, storage and offloading (FPSO) charter will eventually proceed as planned despite the lack of foreign interests on the contract.
This comes as Upstream reported that Petronas has launched a new pre-qualification exercise for the tender for a leased floating production, storage and offloading (FPSO) vessel on October 13, 2021 for its Limbayong field offshore Sabah.
This came less than a fortnight after cancelling the previous tender that had drawn bids from four domestic contractors – Sabah International Petroleum (SIP), Yinson Holdings, MISC and a consortium between Bumi Armada, MTC and India-based Shapoorji Pallonji.
While the prior FPSO tender was issued only to Malaysian contractors and lead contractors, the research team at AmInvestment Bank Bhd (AmInvestment) said this prequalification exercise could be an attempt to include international floater giants such as Modec and SBM Offshore even though foreign contractors have so far shown little interest.
“In our view, we believe that the FPSO charter will eventually proceed as planned given that a contract to install subsea production systems, subsea umbilicals, risers and flow lines for the Limbayong field has already been secured by TechnipFMC.
“Contenders to supply the external turret for the FPSO included Bluewater, SOFEC, National Oilwell Varco and London Marine Consultants,” it opined.
Despite the rebidding exercise, AmInvestment believe that this does not mean that the oil and gas (O&G) contract rollouts have lost momentum.
It pointed out that there are still multiple FPSO charters currently in the global pipeline amid a limited selection of financially sound operators in the aftermath of the 2015 to 2017 oil downturn.
“This is underpinned by Yinson recently signing a memorandum of understanding with Brazilbased Enauta Participacoes SA for a direct and exclusive negotiation to supply an FPSO with potential conversion costs of up to US$500 million to the Atlanta field in the Santos Basin, offshore Brazil. This is expected to reach a firm contract by January next year.
“Besides competing with MISC for the Limbayong FPSO, Yinson is also bidding for the Pecan charter off Ghana with its purchase option for Woodside’s Nganhurra FPSO.
“Additionally, Yinson together with Technip Energies are undertaking pre-front-end engineering and design (FEED) services for Total Energies for two large FPSOs to be deployed in Cameia, Block 20/21, Angola and Maka, Block 58, Suriname.
“Still owning the 300,000mt VLCC Hawk (formerly Apollonia), Yinson has not given up on the FPSO charter of the Parque das Beleias field in Brazil that has been cancelled twice over the past year,” it explained.
On the sector’s prospects for the remaining half of the year, AmInvestment expected a recovery in 3Q21 order flows.
“The sector’s contract awards in 3Q21 to Malaysian O&G operators rebounded 86 per cent q-o-q to RM4.2 billion, largely from multiple jobs awarded to Sapura Energy. Excluding a lumpy RM1.5 billion construction award to Serba Dinamik to build a data centre in Abu Dhabi in August 2020, the 3Q21 orders rose 41 per cent y-o-y,” it said.
Aside from that, it raised its forecast on the 2021 and 2022 oil price by US$5 per barrel to US$70 to US$75 per barrel as Brent crude oil prices have recovered above US$80 per barrel currently after falling to US$65 per barrel on August 20 on concerns that the Covid19 Delta variant could dampen global demand.
“As US inventories slid 15 per cent from the YTD peak of 502 million barrels on March 26, 2021 to below pre-pandemic levels at 427mil barrels currently (five per cent below the 2019 average of 448 million barrels), our raised 2021 to 2022 price projection is in line with the EIA’s Short-Term Energy Outlook of US$71 per barrel for 2021 and US$72 per barrel for 2022.
“Notwithstanding the global demand recovery on the back of rising vaccination rollouts, we are cautious on the possibility of Iranian crude re-entering global markets, rebound in US shale production and further relaxation of OPEC production quotas,” it said.