Original source：Goldman SachsFirst published on Unhidea：Original source date：
Key takeaway
CIMC Raffles management is optimistic about offshore engineering demand and the shift of capacity to China, and plans to expand capacity to take on orders. However, its forecasts show both global project approvals and FPSO orders declining after near-term peaks.
How long can the offshore project boom last?
After visiting the Yantai shipyard, Goldman Sachs recorded CIMC Raffles management’s assessment: the global offshore engineering industry is in a prolonged upcycle, and approvals of new projects will support order demand. Management expects approvals of new offshore projects worldwide to reach 152 billion dollars in 2026, the highest level since 2015.
Management expects the value of approvals to fall to 145 billion and 120 billion dollars in 2027 and 2028, respectively, still above the annual average of approximately 60 billion dollars in 2015–2020; from 2029 onward, it expects a further decline to approximately 70 billion dollars a year.
This assessment is based on the expectation that oil prices will remain above the break-even level of 40–55 dollars per barrel for deepwater oil and gas projects. Project approvals are a leading indicator of order demand; the value of approvals is not the same as shipyard orders already signed.
Where will incremental FPSO orders come from?
An FPSO is a floating production, storage and offloading unit. Management expects global new orders of 10 units each in 2026 and 2027, falling to 7 units a year in 2028–2030; the average for 2026–2030 is approximately 8 units a year, 14% higher than the approximately 7 units in 2020–2025.
Demand comes mainly from Brazil, Africa and Asia. Management expects Asia in 2026 and Africa in 2027 to each receive orders for 5 FPSOs, together accounting for half of global new orders over those two years; Brazil is expected to receive orders for approximately 2 FPSOs a year over the next 5 years. Demand in Australia, Europe and North America is expected to recover after 2028.
Why is CIMC Raffles expanding its dock?
Management says the company’s existing capacity is becoming tight, with offshore engineering and commercial vessel orders booked through 2029–2030. At full utilization, existing facilities have annual output value of 20 billion–25 billion yuan.
The company plans to build a dry dock 668 meters long and 136 meters wide, capable of accommodating the simultaneous construction of 1.5 FPSOs. Management guides for the new dock to enter service in the first half of 2028, with annual output value of 15 billion yuan at full production, equivalent to an increase of 60%–75% in existing capacity.
The business rationale for the expansion is to capture unmet demand. Management says the company has engineering, procurement and construction contracting capabilities for floating production units, FPSOs and floating liquefied natural gas facilities, and in 2022 became one of the first two Chinese offshore engineering companies qualified by Petrobras as FPSO prime contractors.
What opportunities can Chinese shipyards capture from the shift?
Management believes capacity constraints in South Korea and Singapore are leading them to focus on high-value segments such as FPSOs and floating liquefied natural gas facilities. Some offshore engineering business will shift to China, and CIMC Raffles is expected to benefit.
The report says China has ranked first globally in offshore engineering by contract value for eight consecutive years and continues to gain share from South Korea; Singapore’s share is relatively stable, at 20%–30%. China currently has a stronger position in specialized vessels, while expansion into high-value offshore engineering projects remains dependent on the relevant capabilities and capacity.
