The outlook for FPSO and wind power engineering vessels continues to improve

Offshore equipment market: FPSO and wind power engineering vessels continue to drive the demand for offshore engineering equipment recovery

FPSO and wind power engineering vessels led to a strong recovery in the offshore industry market. According to Clarksons data, from 2020 to 2022, the global new orders for offshore equipment will be 4.01 billion, 9.16 billion and 16.71 billion US dollars, respectively, and the offshore equipment market will recover strongly. Among them, FPSO (floating production, storage and unloading equipment) and wind power engineering ships are the backbone to support the recovery of this round of offshore industry; In 2022, a total of 137 offshore equipment were sold in the world, with a value of 25 billion US dollars, and 23 production, storage and transportation equipment represented by FPSO were sold, with a value of about 16.5 billion US dollars, accounting for 67%. The number of construction equipment transactions based on offshore wind power engineering construction ships was 94, with a value of 7.8 billion US dollars, accounting for 32%. Among them, Chinese shipyards won 68 offshore orders in 2022, about $15 billion.

FPSO: Orders show a high correlation with oil prices, and contract awards are expected to continue to grow in 2023

The number of FPsos awarded has a high correlation with oil prices. The number of new contracts awarded for global FPSO (floating production, storage and offloading units) has a strong correlation with the trend of global crude oil prices, and the strong recovery of crude oil prices in 2021-2022, and the rapid growth of new contract orders for FPSO. The number of new FPSO contract orders globally in 2021-2022 is 10 and 9, respectively, a significant increase from 3 in 2020. With the optimization and adjustment of China's epidemic prevention policy, the growth prospects of crude oil demand have improved. On the supply side, geopolitical conflicts have added to the uncertainty, coupled with slowing production growth in the United States, further delays in the Iran nuclear deal and continued production restrictions by Opec +, crude oil prices are expected to remain high in 2023.

The number of new FPSO orders globally is expected to continue to grow in 2023. Rystad Energy FPSOCube forecasts that the number of new FPSO contracts awarded globally in 2023-2024 is expected to reach 16 and 14, respectively, up from 10 and 9 in 2021-2022. Among them, there will be 12 FPSO contract projects in Brazil in 2022-2024, which will occupy about 1/3 of the global FPSO market order share. In terms of orders, five Chinese shipyards (Ofena, COSCO, CIMC Raffles, Waigaoqiao and China Merchants Heavy Construction) have secured around 80 per cent of the global FPSO share, with CIMC Raffles Marine Engineering taking the top spot and around 80 per cent of Petrobras orders.

Wind power engineering ships: The global offshore wind power construction is accelerating, and the demand for wind power engineering ships is growing rapidly

Global offshore wind power construction is accelerating, with an average of 31.5GW of new capacity expected to be installed annually from 2022 to 2031. GWEC's 2022 Global Offshore Wind Report, released in June 2022, predicts that 315GW of offshore wind capacity will be added globally between 2022 and 2031, with an average annual new capacity of 31.5GW. Among them, the new offshore wind power installed capacity in Europe and China will reach 141GW and 98GW in 2022-2031, accounting for 45% and 31% of the global new installed capacity, respectively. Offshore wind will also account for more than 30 percent of global wind power installations by 2031, up from 23 percent in 2021.

Clarksons predicts that the demand for wind power engineering vessels is expected to reach $26 billion in 2023-2028. According to Clarksons data, the total value of new ship orders for wind power engineering vessels in 2022 is as high as 6.2 billion US dollars. Among them, wind turbine installation vessel (WTIV) orders reached 27 new vessels, an increase of 9%, and total investment of $4.1 billion, an increase of 32%, of which Chinese shipowners placed orders for 21 vessels. Wind power operation and maintenance (C/SOV) new ship orders also reached a record 24, up 60% year on year. Clarksons predicts that, thanks to the accelerated construction of offshore wind power, the world will invest more than $26 billion in the construction of new offshore wind vessels from 2023 to the end of 2028, including the construction of 70 WTIVs at a cost of $21 billion. Another $5 billion to build 90 C/SOV and transfer vessels.

New ship order value forecast for 2023-2024 by ship type

The order value of oil tankers and dry bulk carriers in 2023-2024 is expected to recover strongly and relay this cycle. (1) Oil tankers: We forecast that the value of new ships in 2023-2024 will be 14.656 billion US dollars and 20.966 billion US dollars, respectively, +157.8% and +43.1% year-on-year. (2) Dry bulk carriers: We forecast that the value of new ships in 2023-2024 will be 15.344 billion and 25.341 billion US dollars, respectively, +25.6% and +65.2% year-on-year. (3) Container ships: We forecast that the value of new ships in 2023-2024 will be 13.293 billion US dollars and 10.335 billion US dollars, respectively, which is -60.0% and -22.3% year-on-year. (4) LNG carriers: We forecast that the value of new ships in 2023-2024 will be 23.481 billion US dollars and 16.437 billion US dollars, respectively, which is -40.0% and -30.0% year-on-year. (5) Auto ro-ro ships: We forecast that the value of new ships in 2023-2024 will be 7.840 billion US dollars and 7.056 billion US dollars respectively, 56.1% and -10.0% year-on-year. (6) Offshore equipment: We predict that the value of offshore equipment in 2023-2024 will be 23.8 billion and 22.44 billion US dollars, respectively, +42.4% and -5.7% year-on-year. (7) Overall ship market: We forecast that the total value of new ships of all ship types in 2023-2024 will be 115.781 billion US dollars and 128.594 billion US dollars, respectively, which is -11.2% and +11.1% year-on-year.