Market for new floating production systems 'frozen'

WASHINGTON: The market for new floating production systems has frozen as a result of the abrupt downturn in the global economy, according to a new study by Washington-based International Maritime Associates (IMA).

Over the past quarter, no orders have been placed for floating production units, marking the first time this has occurred since 1996 when IMA began tracking the floating production sector.

As a result, order backlog for production floaters has dropped 30 percent from the same time last year, according to IMA's analysis. However, IMA concludes the downturn appears temporary and the long term outlook for the production floater sector remains very strong. Long term fundamentals have not changed and energy demand is expected to continue to grow over the next several decades.

In addition, IMA's researchers believe the futures market is indicating that oil will return to a US$70 per barrel level within three years and US$80 per barrel within eight years. While the immediate price of oil impacts cash available for investment, the expected price provides the basis for measuring project merit.