Time to Go Shopping?
Source: Breakbulk Magazine, January/February 2010 Issue – After a period of booming speculation, the Asian market for oil- and gas-related project cargo was smacked down by the recession. “But as with nature, industrial and financial markets in today’s international trade have their own way of correcting themselves,” said Martin Runshaug, Singapore-based commercial director for BDP Oil and Gas Logistics. “The global recession, which seems to have turned the corner, reintroduced the ‘survival of the fittest.’ ”
Before the recession hit, rigs and other components were being built from Dubai to Goeje, Korea, where the Daewoo and Samsung shipyards are located, Runshaug said. Fabrication yards were jammed. Everyone was working against time. Although many components were built on contract, as the boom grew, so did speculation. Optimistic developers would find yard space, build a floating production, storage and offloading facility, and bet they would be able to get a contract for it after it was built.
However, Runshaug said, this meant they were building generic FPSOs, rather than FPSOs tailored to specific fields, and this made it harder to find contracts for them. In other cases, oil and gas fields were waiting for a given FPSO, but the developers didn’t have the resources to complete the project, because of the recession. Projects were often delayed or canceled.
Now may be a good time go shopping, with positive movement over the last three months in the oil and gas industry, Runshaug said. “Oil has increased to about $80 a barrel, a more sustainable price . . . More and more of these companies will find it more economical and timely to proceed with their projects,” he said.
BDP is looking toward the third and fourth quarter of 2010, when they expect the project cargo trade to pick up, he said. “We transport mooring systems, power generation equipment, living quarters, process and separation modules, and cranes — all the big stuff. These are all quite long-lead items, and projects are just now getting kicked off, so most will only start moving toward the third quarter of 2010.”
FPSOs have been important to the oil and gas industry for years, Runshaug said. In many cases, manufacturers strip down old single-hull oil tankers and add modules to them to make FPSOs. These are then moved to locations worldwide where they are often used for as long as 15 to 20 years. Since modern tankers must have double hulls, this is a way to recycle older tankers.
By: Janet Nodar
To read the January/February 2010 issue of Breakbulk Magazine, please click here.