MODEC and TOYO in talks for FPSO joint venture

Japan’s MODEC and Toyo Engineering Corporation (TOYO) are entering into talks to study an alliance for FPSO vessels.

MODEC said on Thursday that the two companies have reached an agreement to execute a Memorandum of Understanding (MOU) to enter into discussions and to conduct the Feasibility Study (FS) regarding the alliance in the Engineering, Procurement, Construction and Installation (EPCI) business for FPSO vessels.

Subject to the result of the discussion and FS, the business alliance also contemplates the establishment of a joint venture company by the end of 2021.

MODEC believes that potential demand for FPSOs is expected to remain consistent with global demand for oil and gas and the development of new projects is also expected to proceed steadily. Therefore, MODEC and TOYO recognize the important roles they play by supplying stable energy through the FPSO business.

Furthermore, both companies recognize that efforts to realize a decarbonized society and MODEC and TOYO aspire to explore into a new business as well as to develop new technologies for next-generation FPSOs through the synergies of the two companies.

Key expectations toward the business alliance include enhancing engineering and project management capabilities and optimizing human resources and organizational structure.

Expectations also include leveraging capacities to address multiple large-scale projects, more cost-competitive offering to secure projects and enhancing the profitability of EPCI business through efficient cost estimate/reduction initiatives.

Finally, the two companies will be developing new technologies applicable to next-generation FPSOs and exploring new technology and product opportunities in growth markets for the realization of decarbonized society.

The Japanese company has also recently been awarded a contract to deliver one of the largest FPSOs ever delivered to Brazil for Equinor’s Bacalhau project. MODEC will also provide Equinor with operations and maintenance service of the FPSO for the first year from its first oil production, after which Equinor plans to operate the FPSO until the end of the license period in 2053.

In other company news, MODEC President and CEO, Yuji Kozai, in April 2021 resigned for reasons of ill-health. Following Kozai’s resignation, Takeshi Kanamori was appointed as the company’s new Representative Director, President & CEO.