MARKET REPORTFloating Production SystemsDownturn in the Deepwater Sector: A Bump in the Road or Long-Term Slowing of Growth?By Jim McCaul, IMA/World Energy ReportsMA/World Energy Reports has just completed a comprehensiveassess-ment of the ? ve year outlook for the Ideepwater sector. The new report – the 19th annual ? oater market forecast prepared by IMA since 1996 -- provides our forecast of orders for ? oating pro-duction systems between 2016 and 2020. Here’s an overview of the ? ndings and conclusions in the report.Bottom Line We see the downturn in market con-ditions and implosion of Petrobras as a bump in the road. While the outlook is clearly dimmer than last year, there is a large backlog of planned projects requir-ing ? oating production systems – and the long term fundamentals to support investment commitment in these projects remain very solid. But the next 12 to 24 months will test the resilience of ? eld op-erators and contractors in the deepwater supply chain. The Current SituationAfter four decades of rapid growth, the deepwater sector has suddenly stumbled. Very few orders were placed in 2015 for ? oating production systems. Only 2 FP-SOs have been ordered since January of this year– compared to 12+ orders annu-ally over the past decade. The downturn in orders re? ects the general unravel-ling in industry conditions. Virtually every company in the supply chain feels threatened by business softness. Capital expenditures are being sliced and deep-water project starts deferred. Personnel reductions are being announced on a dai-ly basis, rig contracts are being cancelled or renegotiated, assets are being written down.What happened?Behind the downturn is an imbalance in oil supply and demand brought on by the emergence of shale/tight oil and inability of major producers to coordi-Photo: iStock14 Maritime Reporter & Engineering News • NOVEMBER 2015MR #11 (10-17).indd 14 11/5/2015 4:53:10 PM