BW Offshore is targeting three new contracts by 2030 as part of its refreshed strategy
Norway’s leading FPSO contractor is targeting three new contract wins by 2030 as part of a refreshed commitment to a sector where it has struggled to secure new contracts in recent years and faced execution challenges on the one project it did win.
Oslo-based BW Offshore said in a results and strategy briefing that it met most of its goals for 2020 to 2024, including the divestment of 12 FPSOs from its fleet and the separation of BW Energy, which brought $632 million of liquidity.
However, it won only one floating production, storage and offloading vessel contract during the period, albeit an auspicious one. The very large BW Opal gas FPSO is about to start operations on Santos’ Barossa field offshore Australia following delays due to environmental legal challenges to the project.
BWO’s fleet currently comprises four floaters — BW Opal, BW Adolo, BW Catcher and BW Pioneer — although it recently sold the Pioneer and provides only the operations services, while BW Energy has a purchase option for the Adolo in 2028.
BWO is pursuing several new floater opportunities, including Equinor’s Bay du Nord in Canada and Repsol’s Block 29, although BWO said Repsol is reconsidering its development plan for Block 29 offshore Mexico.
In addition, BWO has a purchase option on the existing FPSO Nganhurra which is being currently bid for a new contract. Meanwhile, the company is quietly confident of an extension for BW Catcher in the UK North Sea.
BW Opal has a lucrative lease and operate contract worth about $260 million annually in EBITDA over the 15-year contract duration, which will support the company’s future growth.
BWO chief executive Marco Beenen said his company is committed to growth in the FPSO sector, and believes its competitive advantages lie in gas FPSOs and harsh marine environments like the North Sea and the Atlantic.
“Our recent strategy review concludes that BW Offshore is well positioned for the future, addressing both energy security and the energy transition,” Beenen said.
“Oil and gas will remain leading sources of energy for years to come. Against this backdrop, we are reaffirming our position in the FPSO value chain as a more streamlined company, while also refining our floating transition solutions to prepare for the future.”
Anders Platou, chief strategy officer, elaborated on the company’s FPSO goals and floating offshore wind ambitions, including that BWO aims to win a new FPSO contract every other year.
He acknowledged that BWO has “had our commercial and project execution challenges” and that “we have unfortunately not been able to deliver as many new FPSO projects as targeted”.
Fossil fuels and the company’s FPSO offering remain highly relevant well into 2040, he said, adding that the FPSO is market is exciting with multiple opportunities in regional hotspots like Brazil, Asia and Africa.
The company would maintain its “disciplined approach” with clear selection criteria that would apply to both newbuild FPSO projects and redeployment projects.
A recent development where clients are offering pre-payments to enable external financing, as well as new approaches to risk management, “allows us to take on and better manage large FPSO projects”, said Platou.
Contract models have seen a positive shift from lease and operate to engineering, procurement, construction and installation (EPCI); operations and maintenance (O&M); and even hybrid models.
Better sharing of risk is a key focus, whether with oil and gas company clients or with partners and subcontractors, while having quality clients and EPC partners is also vital, along with access to capital on competitive terms.
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