SBM Offshore’s FPSO trio nearing finish line for first oil next year as ExxonMobil sets its cap on buying another Guyanese unit

Netherlands-based SBM Offshore, a provider of the design, construction, installation, and operation of offshore floating facilities, is putting the finishing touches in place to make three floating production, storage, and offloading (FPSO) vessels ready to start their assignments next year. Two of these will be deployed at oil fields offshore Brazil while one is destined for ExxonMobil’s project off the coast of Guyana. Following a recent purchase of one of the units working at the Stabroek block, another one is now on the U.S. player’s acquisition list for this year.

The Dutch deepwater ocean infrastructure player’s directional revenue for the third quarter of 2024 stood at $2.84 billion, a 26% increase compared with $2.25 billion in the same period last year, which is said to be supported by both the Lease and Operate and Turnkey segments.

SBM Offshore’s directional Lease and Operate year-to-date revenue was $1.8 billion compared with $1.4 billion in the third quarter of 2023, representing a 28% uptick, mainly reflecting the contribution of FPSOs Prosperity and Sepetiba joining the fleet upon delivery in Q4 2023 and Q1 2024 respectively.

This revenue increase is attributed to a rise in the reimbursable scope of the fleet and the additional contribution from Angolan entities following the Sonangol transaction, partially offset by the lower revenue generation from FPSO Liza Unity after the sale of the vessel in Q4 2023 with a contribution coming solely now under the operations and maintenance enabling agreement.

On the other hand, the directional Turnkey revenue improved by 24% to $1.04 billion compared with $835 million in the same period last year. This $200 million increase was mainly driven by the contract award for FPSO Jaguar and higher support to the fleet through brownfield activities, partly offset by a comparatively lower revenue booked in the construction portfolio as projects approach completion.

Furthermore, the firm’s directional net debt went up by $603 million to $7.26 billion for the period ending Q3 2024, driven by drawings under the project finance facilities that reflect the continued investment in the construction program of four FPSOs, three of which are on track to start work in 2025.

Øivind Tangen, CEO of SBM Offshore, commented: “Our project portfolio continues to progress as per plan, with three units expected to reach first oil in the course of next year. This convergence towards excellence across our lifecycle is greatly helped by the fast learning achieved through our Fast4Ward program.”

The first of these units, FPSO Almirante Tamandaré, left a Chinese yard shortly after a naming ceremony was held for the vessel. This unit, which Tangen claims will become the ”largest producing FPSO in Brazil and is also the first in Brazil with a Sustainability-1 Notation,” got its name as a tribute to Joaquim Marques Lisboa, Marquis of Tamandaré, who was a 19th-century military hero and admiral of Brazil’s Imperial Army.

SBM Offshore has confirmed the FPSO Almirante Tamandaré’s delivery and arrival at its offshore destination, which occurred in October 2024. The next items on the list – installation, hookup, and offshore commissioning activities – are said to be progressing in line with the plan, thus, the first oil is expected in early 2025.

The FPSO will be deployed to the Petrobras-operated Búzios field. With the potential to produce up to 225,000 barrels of oil per day (bpd) and process 12 million cubic meters of gas per day, the FPSO’s design incorporates SBM Offshore’s Fast4Ward new build, multi-purpose hull.

This giant FPSO is sporting decarbonization technologies, such as the closed flare, which, together with other equipment, slashes greenhouse gas (GHG) emissions with the technology for using heat curbing the need for additional energy, on top of equipment for removing CO2 from the gas and its subsequent injection into the reservoir.

Petrobras reached a cumulative production of 1 billion barrels of oil from Búzios in March 2024, with five FPSO units operating at the field: P-74, P-75, P-76, P-77, and Almirante Barroso. The Búzios consortium consists of Petrobras (operator), its Chinese partners, CNOOC and CNODC, alongside Pré-sal Petróleo S.A. – PPS, the company managing the production sharing contracts (PSCs).

The second unit on the list of projects preparing to cross the finish line is the FPSO Alexandre de Gusmão with the integration phase completed. As a result, the teams are focusing on commissioning activities until sail-away, planned around year-end. The first oil is expected in 2025.

Thanks to a 22.5-year lease and operation contract with Petrobras, this vessel has been hired to work at the Mero field offshore Brazil, where it will become the fourth definitive system installed on the field in the Santos Basin approximately 160 kilometers offshore Rio de Janeiro in Brazil. 

The field is operated by Petrobras (38.6%), in partnership with Shell Brasil (19.3%), TotalEnergies (19.3%), CNPC (9.65%), CNOOC (9.65%), and PPSA (3.5%), representing the government in the non-contracted area.

The third unit on SBM Offshore’s list of the ones nearing completion is the FPSO One Guyana for which the construction of topside modules started in September 2022 with two steel strike ceremonies held in both Keppel FELS and Dyna-Mac yards to mark the occasion. 

The FPSO will be used at the fourth development within the Stabroek block, known as the Yellowtail development project, comprising six drill centers and up to 26 production and 25 injection wells. ExxonMobil sanctioned the project in April 2022 and followed it up with a contract confirmation with SBM for the supply of the FPSO.

The Dutch firm has confirmed the progress in the integration and onshore commissioning activities, which are said to be in line with the plan, including the completion of the power plant commissioning. Therefore, the first oil is slated for the second half of 2025.

The FPSO One Guyana will have an optimum production capacity of 250,000 barrels per day (bpd) of oil, a storage capacity of two million barrels of crude oil, a gas treatment capacity of 450 million ft³ a day, and a water injection capacity of 300,000 bpd.

The Stabroek block covers 6.6 million acres or 26,800 square kilometers and is operated by ExxonMobil’s affiliate Esso Exploration and Production Guyana with a 45% interest. The company’s partners in the block are Hess Guyana Exploration (30%) and CNOOC Petroleum Guyana (25%).

SBM Offshore has received a notification from ExxonMobil Guyana about its intention to exercise its right to purchase FPSO Liza Destiny by year-end 2024, ahead of the end of the maximum lease term which would have expired in December 2029.

This follows the purchase of the FPSO Prosperity, which came a year after ExxonMobil paid around $1.26 billion to the Dutch firm for the FPSO Liza Unity working on Phase 2 of the first oil development project on the Stabroek block.

The purchase of the FPSO Liza Destiny will enable ExxonMobil to assume ownership of the unit while SBM Offshore will continue to operate and maintain the FPSO, which started production in December 2019 as part of the Liza Phase 1 development. 

The Netherlands-based company intends to apply net cash proceeds to the full repayment of the $405 million outstanding project financing to decrease its net debt position, which will be boosted with the repayment of the $979 million outstanding financing for FPSO Prosperity.

SBM Offshore’s 2024 directional revenue guidance has been increased to above $6 billion of which over $2.3 billion is anticipated from the Lease and Operate segment and more than $3.7 billion from the Turnkey segment. The firm’s 2024 directional EBITDA guidance has jumped to around $1.9 billion.

Based on the Dutch giant’s data, the topsides’ fabrication for the FPSO Jaguar recently started in Singapore and the Fast4Ward MPF hull’s delivery is due in the last quarter of 2024. The first oil is scheduled to be achieved in 2027.

The total number of MPF hulls ordered to date under the firm’s Fast4Ward program stands at nine, with three Fast4Ward-based vessels now in operation, five hulls allocated to projects in construction, and one reserved as part of tendering activities. SBM Offshore’s fleet’s uptime was 95% year-to-date, mainly reflecting the shutdown of two units in the same period last year.

The Dutch player, together with its partner Technip Energies, was recently entrusted with the construction and installation of an FPSO for TotalEnergies’ new oil development project in Block 58 off the coast of Suriname.

The firm’s mission to accelerate the decarbonization of traditional energy production is said to have been recognized by the American Bureau of Shipping (ABS), which bestowed its approval in principle (AiP) for the Dutch player’s tower loading unit and catenary anchor leg mooring soft yoke systems designed for ammonia and CO2 injection.