1. FUTURE FPSO PROJECTS IN THE DECISION-MAKING PROCESS
Presentation by Jim McCaul at the
Emerging FPSO Forum 25 September 2013

2. OUTLINE OF PRESENTATION
The Pros and Cons of FPSOs
Profile of FPSO use worldwide
FPSO Projects in the Planning Stage
Our Forecast of FPSO Orders
Issues Impacting Outlook

3. FPSO PROS AND CONS PRO CON
Has field storage and can be used in remote locations – self contained
Can operate on shallow or ultra-deepwater fields
Less weight sensitive than other types of FPSs
Leasing transfers some risk from field operator to contractor
Assumed residual value used as a competitive tool in leasing bids
Deck area allows flexibility in process plant layout
Surplus/aging tankers can be used for conversion
Can be modified/redeployed following field depletion
Quick disconnect turrets enable emergency relocation
CON
Subsea tiebacks create higher well maintenance costs
Turret/swivel machinery complex and failure a major problem
Cost and delay surprises when converting tankers to FPSOs
Redeploying an FPSO not as easy as it may appear
Source: BWO

4. 204 FPSOs ARE IN SERVICE, AVAILABLE OR ON ORDER (number of units as of September 2013)
27% of FPSOs are offshore Brazil
21% are located offshore Africa
14% are off Northern Europe
12% are in Southeast Asia
7% are off China
7% are off Australia/NZ
5% are in other locations
7% are without field assignment
* * * *
13 FPSOs are currently off field and looking for work
1 FPSO being built has no field assignment
Note: Data exclude 4 small FPSOs used for well test in the GOM and 2 FPSOs built for emergency spill recovery
On Order
Existing

5. 84% MORE FPSOs IN SERVICE THAN 10 YEARS AGO – WITH 123% MORE OIL PROCESSING CAPACITY
Number of FPSOs in Service
Total Oil Processing Capacity on FPSOs (000s b/d)
Avg. FPSO Oil Processing Capacity (000s b/d)
Avg. Water Depth of FPSO Installations (meters)
2003
2013
% Chg.
Africa 18 38
111%
1396
4390
214% 78
116
49%
208
678
226%
Australia/NZ 9 12
33%
657
979 73 82
12%
152
290
91%
Brazil 37
311%
845
3937
366% 94
106
13%
826
1075
30%
Canada 1 2
100%
150
250
67%
125
-17% 90
105
17%
China 11 13
18%
734
902
23% 67 69 4% 77
-27%
Gulf of Mexico
n.a.
280
140
1339
India
120 60
643
Mediterranean 5 3
-40%
174
-56% 35 26
-26%
228
321
41%
N. Europe 19 22
16%
1783
1884 6% 86
-9%
167
159
-5%
SE Asia
401
877
119% 36 40 9%
137
104%
Global Total 83
153
84%
6140
13696
123% 74
21%
227
534
135%
Note: Data exclude 13 FPSOs currently without field contract, a spill recovery FPSO and 4 small FPSOs used for well test on the Mexico side of GOM.

6. 44% OF FPSOs IN SERVICE OR ON ORDER ARE LEASED
Total FPSOs
Owned Units
Leased Units
% Leased
Africa 42 23 19
45%
Australia/NZ 14 9 5
36%
Brazil 56 31 25
Canada 2 0%
China
Gulf of Mexico 3
100%
India
Mediterranean 1
33%
N. Europe 28 16 12
43%
SE Asia 10 15
60%
Global Total
190
107 83
44%
Note: Data exclude 14 existing and on order FPSOs without field contract, 2 spill recovery FPSOs and 4 small FPSOs used for well test on the Mexico side of GOM.

7. MORE THAN 120 FPSO PROJECTS ARE IN THE VISIBLE PLANNING STAGE
These are announced discoveries where an FPSO is either planned or logical production solution given the location and field characteristics
~25% are in the bidding or final design stage
~75% are in the planning and study phase
Taking into account projects requiring multiple production units, development of the discoveries could require 135 to 140 FPSOs
Another 20+ discoveries could require an FPSO, BARGE, MOPU/FSO, SUBSEA or other system

8. WHERE FPSO PROJECTS ARE BEING PLANNED
Brazil is clearly the major location for future FPSO projects – 51 projects in planning stage
Africa is next in line – with 13 projects in Angola, 11 Nigeria and 9 elsewhere
SE Asia is in 3rd place with 11 projects
No. Europe is in 4th place with 8 projects
In 5th place is the GOM – 6 projects, all on the Mexican side

9. EXAMPLES OF FPSO PROJECTS IN THE PLANNING STAGE
Discovery
Country
Field Operator
Water Depth
Estimated Production Start
Africa
(meters)
Blk Kaombo GG
Angola
Total
1600
2016/17
Bonga Southwest
Nigeria
Shell
1200
2017/19
Nsiko
Chevron
1768
2018/20
Elephant
Congo
CNOOC
550
2020/25
Bobo
2480
Brazil
Oliva/Atlanta BS-4
Queiroz Galvao
1560
Carioca BM-S-9
Petrobras
2150
2016
Carcara BM-S-8
2027
2018
Espadarte Module III
750
2020
Libra Complex
Petrobras/ANP
2200
Franco Leste
1800
2019
Other Regions
Ayatsil/Tekel
Mexico
Pemex
115
2016/18
El Perdido
2018/22
Kraken 9/2b UK
EnQuest
100
Gohta
Norway
Lundin
342
Sea Lion
Falklands
Premier
450
Belud
Malaysia
Hess
155
2015/16
Bunga Dahlia/Teratai
Petronas
65-70
Ubah
1430
D-56
India
BP/Reliance
1743
EXAMPLES OF FPSO PROJECTS IN THE PLANNING STAGE

10. LOCATION AND TIMING OF VISIBLE FPSO PROJECTS
Visible Projects
Likely Production Start
Number FPSOs Required
2014/20
2020+
Africa 33 17 16
Australia/NZ 1
Brazil 51 29 22 36
Canada 2
China
Gulf of Mexico 6 4
Mediterranean 3
N. Europe 8 7
Other So. Amer
SE Asia 11
SW Asia
Global Total
123 79 44 58

11. PROCESSING PLANT CAPACITY IN VISIBLE FUTURE FPSO PROJECTS (b/d in 000’s)
58% require topside plants with 100,000 to 200,000 b/d oil processing capability
21% require topside plants with 50,000 to 100,000 b/d capacity
10% involve small FPSOs with less than 50,000 b/d plants
3% are mega- FPSOs with more than 200,000 b/d processing capacity
7% are primarily gas FPSOs

12. FPSOs Required Between 2014-2020
BREAKDOWN OF PROCESSING CAPACITY REQUIRED FOR VISIBLE FUTURE FPSO PROJECTS (b/d in 000’s)
FPSOs Required Between
FPSOs Required 2020+
<50 b/d
50 to 100 b/d
100 to 150 b/d
150 to 200 b/d
200+ b/d
Gas
Africa 5 7 2 1 4
Australia/NZ
Brazil 15 9 3 12 21
Canada
China
Gulf of Mexico
Mediterranean
N. Europe
Other So. Amer
SE Asia 6
SW Asia
Global Total 14 19 24 11 8 10 20 25

13. WHAT WILL DRIVE THE PACE OF FUTURE FPSO ORDERS?
Underlying market conditions
Smaller FPSOs for marginal fields are influenced by near term oil price expectations and availability of financing
Large FPSOs intended for major developments tend to be less sensitive to oil price and financing
Passing the FID hurdle
But even the biggest oil company has to make choices -- there are budget constraints and limits on available personnel to manage project implementation
Whether an FPSO project gets into the CAPEX plan depends on its ranking in terms of expected return on investment
This will be determined by the project economics – and the economics of other investment possibilities

14. MARCH 2013 FORECAST OF FPSO ORDERS OVER THE NEXT 5 YEARS
Most Likely Forecast Assumptions
Global economic growth averages 3 to 4 percent annually over next few years
Oil demand growth remains around 1 percent per year
Mideast tensions continue, but no major oil supply interruption
Oil price expectations hover in $90 to $110 range
Some cost growth and delivery bottlenecks in the FPSO supply base, but not enough to slow major project starts or erode contractor profits
No major environmental incident involving an FPSO
No major impact from shale oil on deepwater investment

15. ASSUMPTIONS UNDERLYING THE HIGH AND LOW FORECASTS
Low Forecast Assumptions
China and/or India economies falter, Europe/U.S. economies continue to stagnate over next few years
World GDP growth turns downward
Global oil demand growth falls as economic activity and world output slows
Tight oil, shale oil finds grow internationally, technology advances lower cost
Oil price expectations fall to $70 to $90 range, negating commercial viability of many visible marginal floating production projects
Contractors experience supply constraints, raising costs, creating delivery delays
High Forecast Assumptions
Global economic rebound accelerates quickly from 2013 onward, rises to 4 %+ per year
Oil demand growth tracks upward with economic growth
Mideast tensions grow, oil supply interrupted
Shale oil and/or tight oil projects meet worldwide opposition, delaying project starts
Many unconventional onshore fuel projects encounter continuing logistics constraints
Oil prices spike to $150+ and expectations remain above $120, making most visible marginal floating production projects commercially viable
Little cost growth, few delivery constraints in the floater supply chain

16. THE LOW END OF THE MARCH FORECAST IS NOW LOOKING MORE LIKELY
Portfolio of potential FPSO projects has been growing
But new project starts have slowed – 9 FPSOs have been ordered thus far in 2013, an average of 1 order/month
Cost growth, access to financing, market barriers, other issues seem to be creating barriers
We now see the low end of the forecast range – i.e., ~90 FPSOs – as the most likely forecast of FPSO orders

17. ISSUES Local content requirements are
Creating market entry barriers and limiting competition
Raising costs – e.g., Egina FPSO $3.1 billion!
Clogging the supply chain
Shale oil/tight oil growth is a threat to deepwater
Added supply could result in lower oil prices
Shale oil projects could draw investment resources from deepwater
Deepwater costs are increasing – shale oil/tight oil cost are falling

18. Thank You
If you would like to discuss any aspect of this presentation or get further details on the FPSO market, please contact
Jim McCaul or
Our website has further information that you may find useful. Please give us a visit.