According to the latest research report titled "FPSO Market Forecast to 2028 - COVID-19 Impact and Global Analysis," published by The Insight Partners, the market is expected to grow from US$ 11,911.53 million in 2021 to reach US$ 21,833.07 million by 2028; it is estimated to grow at a CAGR of 8.0% from 2021 to 2028.
Rising Number of Offshore Exploration and Production Activities to Drive Market
The FPSO market is being driven by the significant increase in offshore oil & gas exploration and production over the past few decades. Furthermore, the discovery of new oil & gas reserves is growing exponentially worldwide. For instance, in 2019, Rystad Energy reported the discovery of 12.2 billion barrels of oil equivalent, with offshore regions leading the new oil & gas deposits. Additionally, Equinor announced in September 2020 the discovery of new oil & gas fields at the swisher prospect and two oil fields in the Flemish Pass basin offshore Newfoundland. The International Energy Agency (IEA) projects that by 2040, Brazil's annual capital expenditures for offshore oil & gas production activities will total US$ 60 billion. These factors are driving the growth of the FPSO market.
Furthermore, the FPSO market is boosted by the increasing number of marginal oil reserves exploitations in remote offshore areas, as well as the flexibility of FPSOs to operate without the support of a fixed structure. In August 2018, an estimated 170 million barrels of oil reserve were discovered in an oil field on Australia's Northwestern Shelf. The rapid growth of the FPSO market size is due to the increasing number of offshore exploration and development activities, as well as advancements in deepwater technology.
Most Middle Eastern oil producers belong to the Organization of Petroleum Exporting Countries (OPEC), which coordinates oil extraction quotas and prices among its members. According to OPEC, these countries produce around 41.9% of the world's crude oil, with Saudi Arabia generating approximately 12.2 million barrels per day. The Middle East is expected to witness 615 oil & gas projects from 2021 to 2025, comprising 143 midstream projects, 77 upstream projects, 83 refinery projects, and 312 petrochemical projects, which will drive the FPSO market growth in the region.
The FPSO market, like the overall oil & gas industry, was negatively impacted by the COVID-19 pandemic in 2020 and 2021 due to significant disruptions in the industry's supply chain activities, coupled with several countries sealing off their international trade. Consequently, the discontinuation of oil & gas activities led to a decline in the demand for FPSO and related products & services. For instance, MODEC, the FPSO construction business, saw a drop in profits in 2020 due to delays in FPSO construction projects and longer shutdowns of producing ones caused by supply chain difficulties, which reduced the share of the FPSO market. Moreover, the Middle East & Africa heavily rely on China, which generates more than half of the world's oil & gas technologies. The COVID-19 pandemic caused a significant disruption in the global supply chain network, including oil & gas, leading to restricted demand for FPSO units in the Middle East & Africa. However, the growing demand for FPSO due to increasing offshore and onshore oil & gas extraction projects is expected to boost the FPSO market share in the upcoming years.
Key Findings of Study
The FPSO market is categorized into five primary regions, namely North America, Europe, Asia Pacific (APAC), Middle East & Africa (MEA), and South America (SAM). In 2020, South America held a significant market share in the FPSO market due to the high awareness of FPSO among end-users. Technological advancements have had a direct impact on the economy of Brazil and Argentina. Although the use of oil in South America has decreased over the last three years, with the recovery of the crude oil market, companies are now seeking more oil & gas exploration and production opportunities. As per OilNow 2022, South America's major oil-producing nations are Brazil, Mexico, and Venezuela, which together account for over 75% of the region's total output and rank as the 10th, 11th, and 12th largest oil producers worldwide. Despite South American oil output peaking at over 7 million barrels per day a decade ago, current production has surged to 7.5 million barrels per day, driving the demand for FPSO and other equipment and boosting the FPSO market's growth in the region.
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