FPSO Market 2025: Demand Steady, Prices Soar

FPSOs are the backbone of offshore oil and gas production discovery and recovery, providing a bridge between deepwater reservoirs and global energy markets. Today the oil and gas industry as a whole faces consistent and sometimes rapid shifting landscape in terms of economics, technology and sustainability.

According to Tremblay, the FPSO market in 2025 is expected to remain stable, with 10 to 12 offshore production projects reaching final investment decisions (FIDs)—a continuation of 2024 trends. Brazil remains a focal point, with Petrobras leading significant developments, including the Petrobras 86 project and SEAP 1 and SEAP 2 FPSOs. Shell's Gato do Mato project is also anticipated to move forward early in the year.

"The year is front-loaded with Brazil's activity," says Tremblay. "We expect around four to six FIDs in both the first and second halves of 2025, with the majority leaning toward new construction. However, some conversions will still play a role."

The cost of FPSOs has soared. The P-78 FPSO was contracted at $2.5 billion, but just a few years later, P-84 and P-85 are each valued at $4.1 billion. - Matt Tremblay, Vice President, Global Offshore at ABS

New Construction vs. Conversion: Shifting Dynamics

Traditionally, FPSO conversions—modifying existing tanker hulls for offshore production—offered a cost-effective and faster alternative to new builds. However, the industry has seen an increasing tilt toward new construction, with 80% of projects in 2024 being newly built.

This trend is fueled by major players such as Exxon and Petrobras, who are commissioning high-capacity FPSOs, exceeding 200,000 barrels per day.

Tremblay notes, "Conversions can't accommodate FPSOs of this scale, as they're larger than even the biggest ultra-large crude carriers (ULCCs). And with limited shipyards capable of building them, costs are naturally higher."

SBM Offshore's Fast4Ward program is one example of maximizing efficiency, a program which builds FPSO hulls on spec, essentially helping to shorten delivery timelines, bringing new builds below the traditional 36–40 months to under 30 months.

Even with efficiency fixes, the global supply chain remains a critical concern for FPSO construction. Tremblay emphasizes that while equipment delivery delays have stabilized, prices continue to rise.

"The cost of FPSOs has soared," he said. "The P-78 FPSO was contracted at $2.5 billion, but just a few years later, P-84 and P-85 are each valued at $4.1 billion."

One factor behind this cost escalation is vendor strategy, as they take a more measured approach to growth. Tremblay compares FPSO equipment manufacturers to offshore drillers: "After years of financial losses, they're holding off on expanding capacity and instead capitalizing on high demand."

Another factor in the cost equation is, of course, the shipyard.

With only a handful of shipyards capable of building FPSOs, the market remains constrained and China dominates, with four to five active yards, while South Korea’s Hanwha is aggressively competing for market share, leveraging geopolitical concerns, specifically U.S./China relations.

Meanwhile, even the shipyards that dominate the FPSO sector are actively weighing their options, as shipyards must weigh the size and particularly the length of FPSO contracts against more profitable alternatives like gas carriers. “FPSOs take a lot of steel; they're big; they take up a ton of space. I can probably build three, maybe four gas carriers per square meter of dry dock space versus one FPSO; so I'm making more money building gas carriers than I am building FPSOs,” observed Tremblay.

FPSO Maintenance & The Digital Shift

While designing and building modern FPSOs present their own challenges, once built and operational a growing challenge for FPSO operators is maintaining these larger, more technically complex vessels. Traditional calendar-based maintenance cycles are giving way to vessel-specific, condition-based maintenance strategies, supported by digital tools and remote inspection technologies.

"Inspecting every tank in a five-year cycle is logistically tough, especially with FPSOs getting bigger," says Tremblay. "We need digital twins—fully integrated, real-time asset models that allow operators, regulators, and class societies to collaborate on maintenance plans."

Remote inspection tools like drones, cameras, and LiDAR are advancing but remain limited by the need for physical cleaning. "You can’t detect bottom pitting corrosion if the tank is covered in sludge," Tremblay explains. "That’s why the new double-bottom FPSO designs will be a game-changer,” as they simplify tank cleaning, reduce manpower and improving inspection efficiency.

At the same time, FPSO designs are also evolving to align with sustainability goals, with companies like Yinson and Petrobras pioneering technologies such as onboard carbon capture and FPSO electrification.

"Petrobras’ new FPSOs will operate like electric cars—using large natural gas turbogenerators to power electric motors instead of diesel engines. This reduces CO2 emissions by approximately 20%," says Tremblay.