Oil companies paying up to $1 billion extra in tight FPSO market, says SBM Offshore boss

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Unusually tight market conditions in the FPSO market are forcing oil companies to choose unfavourable contracting arrangements that could increase development costs by as much as $1 billion, according to a top executive at a floater company.

Oil companies have two options when it comes to contracting floating production, storage and offloading vessels — they either lease FPSOs that are owned and operated by the contractor, or they buy the FPSOs outright under a turnkey (engineering, procurement, construction and installation) arrangement.