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Leased FPSOs – a more effective way to cut capex?

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Report summary

New build purchased FPSOs have been used by the Majors and NOCs for their mega offshore developments. But with costs for new builds remaining robust other development options like leased FPSO conversions are now being considered. Leased FPSOs tend to deliver improved rates of return. In addition upfront capital is lower and ownership risks are carried by the FPSO contractor. But using a leased FPSO does not always translate to material increase in value. For large developments operators can benefit from economies of scale and go for vessels that can optimise production and value. However in this current environment the simpler and cheaper VLCC option seems more attractive but may result in a sub optimal development.

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    Leased FPSOs – a more effective way to cut capex?

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Table of contents

Tables and charts

This report includes 8 images and tables including:

Images

  • Number of FPSO units installed (2005-2015)
  • Expected FID timeline for pre-FID FPSO projects*
  • New build vs conversion –Pre tax - NPV/boe and IRR*
  • Impact of capital uplift on NPV using Angola PSC*
  • Impact of profit sharing mechanisms on NPV*
  • Leased FPSOs – a more effective way to cut capex?: Image 6
  • Production and cost profile for new-build purchased FPSO
  • Leased FPSOs – a more effective way to cut capex?: Image 8

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