Bumi Armada Bhd , a Malaysia-based international offshore oil field services provider, said on Saturday it has completed a floating production storage and offloading unit (FPSO) for deployment in India and is seeking more projects.
FPSO Armada Sterling, costing more than $360 million, is the company's first FPSO in India and will start producing oil in December.
The FPSO is chartered by Oil and Natural Gas Corp as the state-owned Indian explorer aims to drill for more oil from marginal fields. Bumi Armada is also in the running for a second FPSO project at ONGC's cluster 7 field, Hassan Basma, CEO of Bumi Armada told reporters.
"The cluster 7 will be announced this quarter and we're eagerly awaiting the outcome," he said.
"The market for FPSOs in India is huge," Basma said, as the country steps up exploration in deepwater, shallow and marginal offshore fields to feed strong local demand.
Bumi Armada's joint venture company, Forbes Bumi Armada Offshore Ltd, signed in August last year a 7-year fixed term time charter with ONGC for about $620 million, and the Indian explorer has the option to extend the charter for another six years.
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Armada Sterling, Bumi Armada's fourth FPSO, will depart next month for the D1 field, 200 km (124 miles) off the coast of Mumbai.
The former 107,000 deadweight tonne tanker Monte Umbe has a production capacity of 50,000 barrels per day (bpd) and is able to store 750,000 barrels of liquids.
This year has been challenging for FPSO owners, with just five contracts awarded, while the number of active firms in the sector has dwindled to about 6-7, down from 24 eight years ago, Basma said.
The euro zone debt crisis has made it difficult to obtain financing for projects while oil and gas producers have held back in response to an uncertain oil demand outlook, he added.
The International Energy Agency expects oil prices to gradually ease over the next five years as a result of sluggish economic growth, rising energy efficiency, and as production increases steeply in Iraq and North America. Goldman Sachs forecast Brent to average at $110 a barrel in 2013 on more supply.
"We're looking at $70 and above for sustainable development. We're in a comfort zone," Basma said, adding that he expects FPSO demand to rebound next year as about 150 projects are in the pipeline.
"This demand cannot be held back too long as people have to produce," he said.