FPSO Lease Business
The Opportunities, Issues and Challenges
Zahar Mohd Hashim bin Zainuddin
26th October 2011
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Presentation Structure
1 Introduction
2 FPSO
FPSO
3 Outlook
Issues &
4 Challenges
Concluding
5 Remarks
GMOS. Who we are and what we do
Descriptions and Applications
Opportunities in the FPSO Market
Project Finance, Project Management and capability,
AIM
All rights reserved. Distribution to third parties requires prior written consent from GMOS Sdn Bhd (810996-D)
• Established in early 2010
•Provide Management Consulting & Technical Services specializing
in Offshore Marine Services
•Principals and Associates with various expertises
•Services cover High Level Business Strategy & Management
Consulting to the Management of Detailed Execution Services
•Clients include International Engineering Companies, PSC
Operators, Construction Yards, Offshore Vessel Owners, FPSO
Operators, FPSO Owners
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Experiences & Services
FPSO Development project
• Provision of the preliminary design concept of an
FPSO for an oilfield development.
• Provision of selection criteria and evaluation of
candidate FPSO/vessels selection.
• Provision of the contracting strategy and business
model for the FPSO.
• Provision of budget estimate for FPSO development.
• Provision of bid proposal for FPSO project.
• Provision of Project Execution Plan for FPSO project
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Experiences & Services
Offshore Project Management
• Provide key advice in the design of offshore oil &
gas project management team
• Provide key inputs to the development of
capability elements for offshore oil & gas project
management team.
•Provide key advice to clients for the human
capital development in FPSO and offshore
projects.
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Experiences & Services
Offshore Marine Equipment Sales
• Develop Equipment Sales Strategy in FPSO
market for client in specific segment.
• Provide key advice to clients in Sales for various
FPSO and Offshore Marine Equipment
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Experiences & Services
Offshore Floating Warehouse
• Conduct preliminary due diligence for offshore
floating warehouse
• Conduct feasibility studies for Offshore Floating
Warehouse.
• Conduct Technical Evaluation and Business Risk
Assessment for Offshore Floating Warehouse.
• Conduct Commercial Negotiation for Offshore
Floating Warehouse Acquisition.
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Experiences & Services
Offshore Clean Energy
• Develop preliminary feasibility studies for harvesting
wind energy for offshore facilities.
• Develop concept proposal for the conversion of
hydrocarbon power generating units to wind energy for
offshore facilities.
• Provide key advice to clients for developing offshore
wind energy, utilizing offshore marine facilities.
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Presentation Structure
1 Introduction
2 FPSO
FPSO
3 Outlook
Issues &
4 Challenges
Concluding
5 Remarks
GMOS. Who we are and what we do
Descriptions and Applications
Opportunities in the FPSO Market
Project Finance, Project Management and capability,
AIM
All rights reserved. Distribution to third parties requires prior written consent from GMOS Sdn Bhd (810996-D)
Floating Production, Storage and Offloading
An overview
•Typically deployed to produce
hydrocarbons from subsea wells using
process plants to boost and filter
received fluids
•Cargo tanks onboard are used for
storage of product
•Product exported by shuttle tankers to
shore
Kikeh
Source: PraGlobal
•Vast majority are vessel based (oil
tankers) conversions, though new
builds and non-tanker based designs
are also used
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Floating Production, Storage and Offloading
Key components and processes
WHP
Hull: Provides storage and
buoyancy, primarily constructed
with steel plates
PLEM
Risers: provides connection from
subsea manifolds to FPSO
Turret or Riser Balcony
Mooring: Turret, Spread or DP
Kikeh
Source: PraGlobal
Topsides: process plants on deck
based on reservoir characteristics
and environmental factors
Topsides
Offloading System: normally
undertaken through flexible hoses
to shuttle tanker
Cargo Tanks
Shuttle Tanker
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Applications
Driving FPSO Developments
Deepwater Developments:
EWT/EPS:
•Fixed Structures become uneconomical
and non viable
•Extended Well Testing for fast
tracking smaller developments
•Remote from pipe grids and main
infrastructure
•Early Production System can involve
more than one well, and for early
monetisation and proofing
Stranded Gas fields:
Marginal & Isolated Fields:
•Early gas monetisation
•LPG extractions
•Floaters can be redeployed for
cluster developments with regional
development plan
•Lower cost solutions
•Lower cost solutions
•Smaller facilities offshore than onshore
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Presentation Structure
1 Introduction
2 FPSO
FPSO
3 Outlook
Issues &
4 Challenges
Concluding
5 Remarks
GMOS. Who we are and what we do
Descriptions and Applications
Opportunities in the FPSO Market
Project Finance, Project Management and capability,
AIM
All rights reserved. Distribution to third parties requires prior written consent from GMOS Sdn Bhd (810996-D)
Opportunities in FPSO
Move towards Deepwater
Continuing expansion in use of Subsea Production
Emphasis on fast track developments: Early Production
Systems
Why
FPSO?
Kikeh
Source: PraGlobal
Exploitation of marginal fields & isolated fields
Stranded Gas Monetisation
Development Hubs
LNG FPSOs
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Floaters Operation Worldwide
Bunga kertas Currently in Operating and Outlook Globally
Floaters
256 floaters in service worldwide
62% FPSOs, 17% semi sub, 9% TLP, 7% Spars & 5 % FSRU or
production barges
Ruby
196 discovery or planned development projects in
bidding, design or planning stages
53 in bidding stages with contract award in next 12-18
months
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FPSO Operations Worldwide
Bunga kertasCurrently in Operating Globally
FPSO’s
Ruby
More than 155 FPSOs currently operating
30 FPSO project prospects in the next 3-4 years
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FPSO
Asia Pacific
China – 16 FPSO
<40 Operational FPSO’s Asia
Pacific
Deepwater Developments
Asia Pacific is the third
Largest FPSO market globally
after Latin America and Africa
15 Operational in South East
Asia
Another 20 FPSO’s more
than 12 prospected for Asia in
the next 3 years
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Global FPSO Market
Indicative Supply & Demand
Outlook for FPSOs
Contract Awards
Ruby
Kikeh
Source: PraGlobal



More than 100 prospected FPSO
installation the next 3-4 years
7 FPSO
At least 3 more FPSO projects in Malaysia 
in the next 2-3 years
More than 70 FPSOs installed the last five
years
More than 140 FPSOs currently in operation
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Deepwater
Demand in floaters likely to increase as we venture deeper
Bunga kertas
As shallow water opportunities become
increasingly scarce, the development of
deepwater reserves will accelerate
Kikeh
Source: PraGlobal
Deepwater
Production to
breach
9million
barrels per day
by next year
Deepwater production to primarily come
from GoM, West Africa and Brazil
Active deepwater exploration in SEA,
Sabah as Malaysia’s deepwater
hub
Ruby
Floating Production System the
development method of Choice
Fixed platforms not technically and/or
economically feasible
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Presentation Structure
1 Introduction
2 FPSO
FPSO
3 Outlook
Issues &
4 Challenges
Concluding
5 Remarks
GMOS. Who we are and what we do
Descriptions and Applications
Opportunities in the FPSO Market
Project Finance, Project Management and capability,
AIM
All rights reserved. Distribution to third parties requires prior written consent from GMOS Sdn Bhd (810996-D)
Issues & Challenges
Key Risks in FPS market
Cyclical downturn in crude oil price which may lead to
project cancellation or deferment
New builds coming on stream-the number of
speculative builds tends to rise with the increase in
crude oil prices. However, due to the long cycle time
(1.5- 2years) to bring in new FPSO to the market, the
shortage is unlikely to be alleviated in the short term
Long gestation periods. FPSO has long gestation
periods and are mostly tied to specific oil and gas fields.
Kikeh
Source: PraGlobal
FPSO owners and operators are exposed to cost
escalations, deviations in functional specifications and
other project risks stemming from fluctuation in crude
oil price
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Issues & Challenges
Technical Hurdles

Deeper you go, the more obstacles
you encounter.

A need to invest in R&D to secure
and safely extract our resources.

Human resource capacity and
capability

Lack of expertise in SEA
Kikeh

Politics
Source: PraGlobal
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Issues & Challenges
Financial Hurdles
Subject to steel price, and new build viability
Project finance becoming difficult and more
expensive.
Banks putting closer scrutiny on risk.
A number of deals are failing due to risks that
would have previously been considered minor
Kikeh
Source: PraGlobal
Recent financial crisis has delayed new orders and
a number of lease contractors have run into
difficulties.
A number of FPSO/FSO laid up
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Key Issues & Challenges in FPSO Operations
Design Challenges
Candidate Vessel Selection
Integrating Different Systems
Asset Integrity Assurance
Standards and Regulations
Risk Assessment
Crewing
Offshore O&G vs Marine
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Key Issues & Challenges in FPSO Operations
Bunga kertas
Design
Challenges
FPSO
Conversion/
Construction
Crewing



Misapplication of some major equipment
Poor operational efficiency & equipment selection
Equipment and systems selection driven by cost, not
operability



Operations and field requirements should drive vessel
selection
Long term operability/repair philosophy and strategy
Shipbuilding versus FPSO construction/ conversion



Retention
Competency
Safety Culture
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Key Issues & Challenges in FPSO Operations
Bunga kertas
Integrating
Different
Systems
Standards
and
Regulations
Offshore Vs
Marine

Good Interface management is key to seamless operations
(Turret, Marine, Process, SURF)

Many suppliers – differing standards and integration
issues
Standards/philosophies vary by region



Varying standards and working culture between Offshore
and Marine practices
HSE awareness and appreciation
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Issues & Challenges
Drivers
Capex
Capacity
Oil price
Deeper water
Stranded and Marginal
Fields
Development costs
Geopolitical
Design
Procurement
Construction
Construction Yards
Engineering Capacities
Steel & Materials
Vessels & Logistics
Asset Integrity
Capability
Financing
Understanding Asset Life
Life Cycle Cost
Designing Asset Integrity
Abandonment Cost
Experience manpower
resource
Project Management
Management enablers
Increasing Capex
Leasing options
Redeployment
Managing Cash Flows
Neutral Cash Flows for
contractors
Liquidity available
Risk Profiling
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Presentation Structure
1 Introduction
2 FPSO
FPSO
3 Outlook
Issues &
4 Challenges
Concluding
5 Remarks
GMOS. Who we are and what we do
Descriptions and Applications
Opportunities in the FPSO Market
Project Finance, Project Management and capability,
AIM
All rights reserved. Distribution to third parties requires prior written consent from GMOS Sdn Bhd (810996-D)
Concluding Remarks
FPSO will continue to be the
preferred solution for the offshore
oil & gas facility.
 Risks are getting larger and more
complex.
FPSO offered on a lease and operate
basis more adaptable for marginal,
deepwater field, stranded gas field
and EWT/EPS in terms of cost and
design advantage.
Kikeh
Source: PraGlobal
 Growing opportunities. Risks need
to be managed with investment in
technical
knowledge,
human
capability and engineering capacity.
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Questions
GlobalMariner Offshore Services Sdn Bhd
Tel: +603- 22825280
Fax: +603- 2282 5258
A-16-9 Menara UOA
Jalan Kemuja, Bangsar
59200 Kuala Lumpur Malaysia