The £300m contract that Amec won last week for a floating production vessel could prove a landmark in realising the UK offshore industry’s export ambitions.
The £300m contract that Amec won last week for a 300,000 tonne floating production vessel in Nigeria could prove a landmark in realising the UK offshore industry’s export ambitions.
The award from Shell on behalf of the Nigerian National Petroleum Corporation covers the design, engineering, construction and commissioning of the processing facilities for the giant floating production storage and offloading (FPSO) vessel that will produce oil from the Bonga field in water 1,000m deep. The vessel will be one of the largest of its type in the world, capable of producing 225,000 barrels of oil a day and of storing one million barrels.
While in terms of overall tonnage, the contract is small — accounting for 17,000 of the total — it is disproportionately large in value (the Samsung Heavy Industries contract for the vessel’s hull is worth less than £80m) and employment implications.Amec estimates the contract will provide or sustain 4,000 UK jobs —1,000 at its Wallsend construction yard, 750 at subcontractor Heerema’s facility in Hartlepool, another 200 offsite fabrication posts, 300 in its London engineering office, and 1,600 among small and medium-sized supply firms from Aberdeen to Dorset.
And further UK jobs will come from the award of separate Bonga contracts to the Aberdeen-based ABB Vetco Gray for the sub-sea systems and umbillicals, and to the UK-registered Single Buoy Moorings (UK) for the vessel’s mooring and installation. ABB Vetco Gray’s contract is worth around £140m and SBM’s around £75m.
While the Bonga awards will give the UK offshore supply industry a considerable boost, they may well prove even more significant in the longer term. For they have given the lie to the long-held belief that UK offshore industry exports would be limited to know-how, services and equipment and have opened up a potentially huge market over the next decade.
FPSOs like the Bonga vessel — which look similar to oil tankers — are certain to feature ever more prominently in big oil projects around the world, as they move increasingly into waters that are far too deep for fixed platforms. The west coast of Africa is the prime example, with orders for another six Bonga-sized FPSOs expected before 2010, and there will be other opportunities off South America and Australia, as well as in the far east.
While Amec would not be able to build them all, there are other UK facilities that can undertake the high-value topside work on the vessels, including Kvaerner’s Teesside yard, Barmac’s Nigg/ Ardersier complex and the Aker McNulty facility on the Tyne.
And while UK shipyards will probably never be able to compete with far eastern counterparts for the hulls, some unhappy experiences with placing orders for entire FPSOs with foreign shipyards — where an attractive bid price was more than offset by delays and remedial engineering work — has strengthened the hand of the UK’s specialist offshore facilities.
Amec chief executive Peter Mason said: ’This will be the third floating production facility that Amec has completed for Shell, which gives us a market-leading position in the production of these sophisticated facilities.’
The international market for FPSOs now offers a realistic prospect of the UK offshore supply sector achieving the £2bn (50%) increase in exports by 2005 that the joint government-industry taskforce identified in 1999 as a priority for ensuring a sustainable future.