Sumitomo takes 25% stake in FPSO venture off coast of Brazil
Yinson/Sumitomo FPSO will serve the Marlim oil and gas field revitalization project
13 May 2020 | Michael Marray

SUMITOMO Corporation has concluded an agreement with Yinson Holdings Berhad, a Malaysian offshore development services provider, to take a 25% stake in its floating production, storage and offloading (FPSO) owning and chartering business for the Marlim II Project off the Brazilian coast.

Last October, Yinson signed a letter of intent with Petrobras to supply the Marlim II FPSO, as well as a second letter of intent to provide operation and maintenance service during the roughly 25-year charter period. The company has estimated the aggregate value of the contracts to be equivalent to about US$5.4 billion. Operations are expected to start in Q1 2023.

FPSO facilities are used by the offshore crude oil and gas production industry to produce, process and store oil & gas, to be offloaded direct to tankers. Brazil is the world’s biggest single market for FPSO capacity.

The Yinson/Sumitomo FPSO will serve the Marlim oil and gas field revitalization project, which is operated by Brazil’s Petrobras and situated 150 kilometres off the Brazilian coast in the Campos Basin. The two entities, co-owned by Sumitomo and Yinson, will now sign agreements for owning/chartering and operation/maintenance with Petrobras.

This project represents Sumitomo’s second entry into the FPSO business, following the offshore Ghana oil and gas field development project, in which the company participated in 2018. It is the first project where its participation commences during the construction phase. Through participating in the project from the earlier phase through to operation and management, Sumitomo aims to acquire substantial knowledge and expertise on FPSO business management.

Sumitomo said that it intends to establish the marine infrastructure business, which encompasses FPSOs, as part of its new energy business, and create synergies from its integration with existing energy businesses.

Other Japanese firms are already heavily involved in FPSOs for Brazilian projects. In January, Mitsui and various partners agreed to invest in a long-term charter project to provide a floating production, storage and offloading system (FPSO), also for the offshore Marlim field operated by Petrobras.

The new FPSO, named Anita Garibaldi MV33, has an oil processing capacity of 80,000 barrels per day (bpd) and gas processing capacity of 248 million cubic feet per day (mcf/d). The FPSO will be fixed at about 670m water depth in 2022. It has an oil storage capacity of about one million barrels, and will be chartered for 25 years.

Alongside Mitsui, MODEC, Mitsui OSK Lines (MOL) and Marubeni are shareholders under the deal. MODEC currently promotes the long-term charter business. MODEC and Mitsui will own 32.5% stakes each in MV33, while MOL owns 20% interest and Marubeni holds the remaining 15% interest.

Separately, in October 2019, MODEC signed a Letter of Intent with Petrobras on several FPSOs. They will be part of the Marlim cluster revitalization project, and the first oil production from the vessel is scheduled for 2022.

MODEC said it will also supply three more FPSOs namely the FPSO Carioca MV30, the FPSO Guanabara MV31 and the FPSO Almirante Barroso MV32 to Brazil in the next few years, for deployment in the pre-salt of Santos Basin.

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