“ The Source” for FPS since 1996

Global Floating Production Industry Survey

11th Annual Edition

Feb 2024

Complimentary Copy for

Survey Respondents

Energy Maritime Associates Pte Ltd • www.energymaritimeassociates.com

 Global Floating Production Industry Survey

Table of Contents
¾Business Outlook 3
¾Cost Inflation 4
¾Activity Levels in the Short, Medium and Long Term 6
¾Greatest Growth Obstacles 7
¾Potential Bottlenecks 9
¾Most Attractive Growth Regions 10
¾FPS Types with Largest Growth Potential 11
¾Technology Game Changers 12
¾How Long Will This Supercycle Last? 14
¾The Rise of Floating Wind? 15
¾What offshore vessel sectors do you foresee facing the most acute shortages over
the next 12-24 months? 16
¾How are or will you handle constraints in the supply chain during the tender/
contracting stage? 18
¾Summary 19
¾About the Survey 19

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 Global Floating Production Industry Survey

Floating Production Industry Survey

FPS INDUSTRY SURVEY

The Global Floating Production Industry Survey, now in its eleventh year, gauges
the current market sentiment as well as where the industry is heading in the future.
Respondents come from all areas of the industry and from all parts of the globe.
Details of the survey demographics are included at the end of this section.

B usiness O utlook
BUSINESS OUTLOOK

Fig 1. Confidence in Business Outlook

This year the sentiment is overwhelmingly positive, with 93% of respondents

confident in achieving their revenue and production targets. This is a record high
in the survey’s 11-years. There has been a continuing trend over the past four years.
In 2021, 19% were somewhat or highly pessimistic, which declined to 8% in 2022, 5%
in 2023 to 0% this year. On the other end, the number of highly optimistic responses
increased dramatically from 29% to 50%. The number of slightly optimistic responses
decreased slightly from 48% to 43%. Also decreasing was the percent of those in the
middle, with 7% having a neutral outlook (down from 19% last year).

This overwhelmingly shows great confidence in the outlook for the offshore
energy sector, with little to no expectations of a negative future.

“Inbound orders and demand for quality vessels looks much closer
to supply levels than they have for the last 10 years.”

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Cost I nflation
FPS INDUSTRY SURVEY

Higher prices are a certainty for 2024 according to all respondents. Increased
activity, reduced competition, and general inflation continue to drive this escalation.
Over 2/3rds expect a 5-10% increase in CAPEX costs, while 20% believe inflation will
be more than 10%. This is a significant change from last year, when 40% of responses
believed costs would increase by more than 10%. The number who expected prices
to rise less than 5% remains essentially unchanged (13%). So there seems to be
consensus that costs will continue to increase in 2024, but at a slower rate than last
year.

The main areas pushing cost inflation remain labor, logistics, and commodities.
Last year there was more concern over commodities, while this year logistics is a
greater issue. Labor continues to be the biggest expected driver of cost inflation
according to 28% of respondents, up 5% from last year. Higher interest rates and
financing costs remain a concern for 17%, unchanged from 2023.

“Supplies of key products and resourcing remains challenging with

quotes having limited guaranteed timelines.”
“Specialized equipment providers are still going to inflate their
numbers by double digits.”
COST INFLATION

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FPS INDUSTRY SURVEY Global Floating Production Industry Survey

Fig 2. Cost Inflation Expected in next 12 Months

COST INFLATION

Fig 3. Areas of Cost Inflation

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Activity L evels in the S hort, M edium and Long Term

FPS INDUSTRY SURVEY

Each year we ask respondents their views on future activity levels. Comparing
last year’s expectations for 2023 with actual activity, we see that predictions were
broadly in-line, with tendering and project execution even busier than predicted.

Busy times are expected for the next two years, particularly in tendering and
project execution. 2024 levels for these two areas are the highest ever recorded in
the survey’s history with 61% and 70% expecting high levels of activity for tendering
and project management respectively. Activity may ease slightly in 2025, with 52%
and 58% of respondents expecting high levels of activity for tendering and project
management respectively.
ACTIVITY LEVEL

Fig 4. Activity Levels

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G reatest G rowth O bstacles

FPS INDUSTRY SURVEY

Access to finance was named as the greatest obstacle to offshore project

growth, moving up from second place in 2023 and fourth place in 2022. Financing
has been a growing concern, as an increasing number of banks have ceased or
restricted funding for hydrocarbon developments. As a result of this and higher
financing costs more field operators have shifted their contracting approach from
leasing to EPC. Contractors throughout the industry are seeking alternative sources
of capital, including bonds and private equity.

Tied for second place were political issues and industry capacity. Industry
capacity has been a growing concern, increasing to 16% of respondents, up from
10% last year, 7% in 2022 and 5% in 2021. Political issues had been the top issue for
the past two years, but moved to second place this year. Concerns remain about
global conflicts, particularly Russia-Ukraine and in the Middle East.

ESG issues / investor sentiment remained in third place this year, unchanged
from 2023. Some respondents believe these are an existential threat to the industry
and companies certainly factor in these issues when making investments, as seen
by Shell’s exit from the UK’s Cambo development. This is another factor contributing
to the difficulty in finding finance for thesep developments. While we agree that
GREATEST GROWTH OBSTACLES

the energy transition will certainly impact the offshore hydrocarbon sector, at the
same time we believe that the industry has a large role to play for many decades
to come.

Environmental regulations and more attractive investment opportunities tied

for fourth place. Environmental regulations slipped one place from third last year,
perhaps as energy security issues and political winds have shifted. More attractive
investment opportunities were ranked in sixth place in 2023. Its perception as an
increased threat could be due to M&A activity, particularly in the onshore US
space. There is continued interest in offshore renewables, despite reassessment
and renegotiation of some projects under development due to unexpected cost
increases.

The price of oil, which had been the main issue for seven years, has been
steadily declining from second place in 2022, to fourth place in 2023, and finally to
sixth place this year.

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FPS INDUSTRY SURVEY Global Floating Production Industry Survey

Fig 5. Largest Obstacle for Awards

GREATEST GROWTH OBSTACLES

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Potential B ottlenecks
FPS INDUSTRY SURVEY

Like last year, the main issues are shipyards, fabrication yards, and offshore
installation. However, this year there is even more concern from respondents about
shipyards. Subsea concerns jumped up from eleventh place in 2022 to fifth place last
year to second this year, reflecting a continued tightening in this sector. In addition
to a busy offshore sector, there has been a huge surge in demand for renewable
infrastructure and shipping with many companies now having full orderbooks for
the next 3 years.
POTENTIAL BOTTLENECKS

Fig 6. Capacity Constraints

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M ost Attractive G rowth Regions

FPS INDUSTRY SURVEY

Brazil remains the top growth region again this year, as it has been since the
beginning of the FPS Market Sentiments Survey. Although Petrobras did not award
any FPSO contracts in 2023, it has tenders currently in progress for five units to
develop new pre-salt fields as well as replace ageing FPSOs in the Campos Basin.
Independent operators are redeveloping older fields, while larger players such as
Equinor and Shell are progressing new developments. EMA is tracking 26 potential
projects in Brazil, which could require up to 38 floating production units.

In second place is West Africa, unchanged from the last two years. However,
the number of votes increased from 16% to 21%, buoyed by the prospects of long-
awaited awards in mature areas like Angola as well as new discoveries in frontier
areas like Namibia.

South America (ex-Brazil) remained in third place, with a growing number

of responses (up from 14% to 17%). ExxonMobil has placed orders for 6 FPSOs and
has plans for an additional 4 units in Guyana (10 in total). There could be potential
for double this number to develop the entire basin, which extends to neighboring
Suriname.
MOST ATTRACTIVE GROWTH REGIONS

Fig 7. Most Attractive Regions

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FPS Types with L argest G rowth Potential

FPS INDUSTRY SURVEY

FPSOs remained the clear leader as the floating production system with the
most promising growth potential, according to 31% of respondents. Floating wind
held second position again, reflecting continued enthusiasm for renewables, despite
recent setbacks due to cost overruns and supply chain constraints. FLNG remained
in third place, although with less support than last year (13% of responses, down
from 19% last year). Perhaps last year there was more optimism driven by the surge
in LNG prices and drive for energy security.
FPS TYPES WITH LARGEST GROWTH POTENTIAL

Fig 8. FPS Type with the Highest Growth Opportunities

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Technology Game Changers

FPS INDUSTRY SURVEY

This year, when we asked which type of technology will have the largest impact
on the offshore industry, floating wind was again the winner by far, accounting for
almost 1/3 rd of votes. While still in its infancy, there is a great deal of enthusiasm and
hope for floating wind. Time will tell if it can live up to the expectations. FLNG was
the top ranked technology in this survey from 2013- 2019, before dropping off the list.

This year there was a three-way tie for second place among Unmanned
Production Facilities (UPFs), subsea production, and long distance tiebacks. Several
reasons account for UPF’s popularity - the high cost of personnel as a portion of
operating costs, application of digital solutions, and increasing comfort with
working remotely. While unmanned fixed facilities are common, the technology is
just beginning to be transferred to floaters. Even if a completely unmanned facility is
not realized, reductions in personnel offshore would result in lower operating costs. In
2022, Chevron placed a $554 million order with Daewoo for the Jansz-Io Production
Semi, which would be the first normally unmanned floating facility.

Subsea Production moved up one spot with 20% of the vote. Use of this
technology can reduce the topside requirements on floating facilities and keep
them within existing designs. The Jansz-Io project features a $795 million subsea gas
TECHNOLOGY GAME CHANGERS

compression station, which is connected to the previously mentioned Production

Semi.

Long distance subsea tiebacks moved up two places this year. This technology
could increase the utilization of existing facilities and follows the trend of infrastructure
led investment. Tiebacks certainly will extend the life of currently installed production
units, while the impact of future requirements is yet to be seen. Some stand-alone
FPS developments could be replaced by tiebacks, while an FPS hub with tieback of
multiple fields could also become economic.

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FPS INDUSTRY SURVEY Global Floating Production Industry Survey

Fig 9. Technologies with the Largest Impact

TECHNOLOGY GAME CHANGERS

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 Global Floating Production Industry Survey

H ow Long Will This S upercycle L ast?

FPS INDUSTRY SURVEY

The oilfield service sector, particularly offshore, has seen strong growth starting
in 2021. Deepwater drilling rates are now over $500,000/day with stacked rigs being
reactivated against long term contracts. Leading shipyards have full orderbooks for
at least the next 3+ years. We asked respondents how much longer this cycle will
continue.

The vast majority expect this growth to continue for many years to come. About
30% believe that the sector will remain busy through 2025, with 70% saying it will last
through 2026 or beyond.

This is in-line with the current floating production orderbook, which stands at
over 60 units. Forty percent of these are scheduled for delivery in the next year.
Another 25% should be completed by 2025. New orders for large floating production
units have expected lead times of 3-4 years.
INDUSTRY SUPERCYCLE

Fig 10. Industry Supercycle

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 Global Floating Production Industry Survey

The R ise of F loating Wind?

FPS INDUSTRY SURVEY

There continues to be a great deal of excitement regarding floating wind,

with many companies looking to diversify into the renewables space. We asked
about the impact of floating wind on the existing floating production sector. Would
it compete or be complimentary and over what period?

50% expected floating wind to be complimentary and enable new floating

oil and gas units (up from 35% last year). These units could then be powered by
renewable sources, rather than from shore, and reduce their carbon footprint.
Plans for offshore power grids are underway in addition to stand alone turbines for
individual developments.

In a large shift from last year, only 23% (down from 43%) believed that floating
wind would be competition for hydrocarbon FPS systems. This change is likely due to
the large cost overruns and string of cancelled projects that have been announced
for offshore wind developments. As a result, the current consensus is that it will take
much longer for offshore wind to compete economically.

A growing number also believe that floating wind will not have a significant
impact on the floating production sector. In 2022, only 13% held this view. Last year
it grew to 20% and to 27%t this year.
FLOATING WIND

Demand for floating hydrocarbons remains strong and while there is certainly
a huge potential for floating wind, costs have not declined as expected. Recent
offshore wind developments have encountered delays and cost overruns, which
has caused many to reassess their current and future investments.

Fig 11. Impact of Floating Wind

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 Global Floating Production Industry Survey

What offshore vessel sectors do you foresee facing the

FPS INDUSTRY SURVEY

most acute shortages over the next 12-24 months?

The survey indicates specialist offshore vessels and assets will face the most
acute supply shortages over the next two years as competing projects across sectors
stretch capacity limits. Heavy lift ships and crane barges are clearly in high demand
already with 25% of participants ranking them as most starved assets. This aligns
with the race to secure advanced booking slots as major oil and gas developments
collide with the growing offshore wind market’s surging foundation installation and
turbine hookup needs. This in turn allows contractors to optimize scheduling across
sectors, while wind developers lacking long-term vessel contracts risk significant
delays.

DSVs followed at 21% in our survey, as saturation diving remains constrained

upholding aging oil and gas infrastructure amid strained global utilization rates.
Though steadily advancing ROV technology carries future disruption potential,
existing platforms still rely heavily on manual inspection and repair. With such limited
diving assets, competitive market dynamics look set to escalate further.
SHORTAGE IN OFFSHORE VESSEL SECTORS

More surprising is only 4% of respondents signalling imminent AHTS shortages,

despite widespread expectations of hot spot demand as older vessels exit and
drilling activity regains momentum. This likely points to their commoditized nature
today, but tighter supply is foreseeable.

In summary, clear signals point to intensifying bottlenecks around maximizing

productivity of ships, cranes, and teams which unlock offshore access. As large-scale
EPIC, decommissioning and renewables additions gather pace in parallel, vessel
demand appears mismatched with supply side capacity emerging post COVID.
This implies that early movers securing specialized tonnage will hold a strategic
advantage as the offshore industry sees little respite ahead.

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FPS INDUSTRY SURVEY Global Floating Production Industry Survey

Fig 12. Most Actue Shortages in Offshore Vessel Sectors

SHORTAGE IN OFFSHORE VESSEL SECTORS

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H ow are or will you handle constraints in the supply

FPS INDUSTRY SURVEY

chain during the tender /contracting stage?

The survey results underscore the scale of delivery risks confronting operators
in today’s fragile contracting climate. Early engagement with suppliers was the
dominant mitigation at 45%, hinting awareness of strained lead times is creeping
up slowly yet surely. Though apt, it will be interesting to see if such strategies are
initiated rather than discussed if confidence stands any chance versus current bid-
ask imbalances. Especially as status quo, not conflict, remains the lurking enemy of
delivery for many incumbents when late supplier switches threaten budget more
than operation.

A beacon to observe is the mere 15% accepting alternative specifications or

execution methods when backed into a corner. Fixed mindsets die hard it seems,
and this suggests that even with megaproject inflation eroding returns and small
players struggling to answer calls, things may stay the same until it’s too late. A lack
of creative compression in contracting stands out as leaving value destruction on
the table and schedules prone to unforeseen disruption. Combined with only 30%
actively widening their search for new suppliers, a gap emerges between intention
CONSTRAINTS IN THE SUPPLY CHAIN

and action that may come back to bite in this unforgiving environment.

In essence operators acknowledge risks today but seem slow to challenge

conventions that served past cycles yet now invite pressure at this maturing point.
While higher costs are the reality, focusing on productivity will increasingly separate
winners from those left wanting in the race to first oil. Dogmatic rigidity appears a
luxury few can afford if access to skills and equipment remains fleeting.

Fig 13. How to Handle Constraints

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S ummary
FPS INDUSTRY SURVEY

The floating production sector grew further in 2023, continuing to rebound

that began in 2021. The industry sentiment is extremely positive, with a record level
of respondents optimistic about the future. These very busy times are expected to
continue for at least the next 2-3 years, despite expected cost inflation and growing
supply chain concerns, particularly with fabrication facilities and shipyards.

The floating production market remains one of the brightest spots in the
offshore industry today, with continued excitement about the floating wind sector.
Offshore development costs remain low, with break-evens under $35/bbl for the
most robust projects. Activity levels are expected to remain high from 2024-26 but
will be challenged by capacity constraints and access to finance.

A bout the S urvey

The Global Floating Production Industry Survey, now in its 11th year, targets
individuals with deep involvement in the floating production industry across its entire
value chain. The survey provides an industry-wide perspective, drawing responses
from a diverse range of companies including oil companies, engineering firms,
financial institutions, equipment providers, construction yards, and asset owners/
operators. Respondents come from a range of executive-level positions with various
ABOUT THE SURVEY

functions, including strategy/planning, sales/business development, engineering/

technical, project management, and commercial/finance.

Fig 14. Survey Profile -Business Fig 15. Survey Profile - Position

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