BW Offshore to fire up FEED work on Bay du Nord FPSO with...

News Digest (www.upstreamonline.com)

Bay du Nord FPSO Project Development

BW Offshore is advancing as the preferred contractor for Equinor's Bay du Nord floating production, storage and offloading (FPSO) vessel project in the Flemish Pass basin off eastern Canada. After securing the contract over Altera Infrastructure, the company signed a heads of agreement and has progressed through a pre-FEED phase. Equinor has now activated a "bridging phase" to further mature the FPSO concept technically and commercially, focusing on a smart, cost-effective design. Front-end engineering and design (FEED) is scheduled to commence in early 2026, pending approvals from Equinor and its partner BP.

Contractual and Commercial Framework

A final contract award is anticipated by the end of 2026. The base case involves a fixed 10-year lease agreement commencing from first oil, with options for extension. The company highlighted that complex projects like this necessitate financial structures with significant day rate pre-payments during the construction phase for new lease and operate models. Alternatively, oil and gas majors might fund and own FPSOs, contracting specialists for design, construction, installation, operations, and maintenance. BW Offshore positions itself to offer both solutions, with a focus on gas, harsh-weather FPSOs, and cost-effective redeployments.

Market Dynamics and Strategic Positioning

Growing global energy consumption is driving interest in FPSOs characterized by long production profiles, low break-even costs, and reduced emissions. However, BW Offshore noted that project sanctioning continues to lag behind market expectations, despite increased FEED and tendering activity indicating a growing pipeline of mature projects. The company employs strict selection criteria for new projects, prioritizing adequate returns during the firm contract period, strong counterparties, and the use of partner models. It expects several projects currently under discussion to reach final investment decisions within the next 12 to 36 months. The required high competence levels for project execution are anticipated to enable better risk-reward balance and improved margins for FPSO contractors.

Financial Performance

In its third-quarter results, BW Offshore reported a net profit of $23.3 million, a slight decrease from the $24.6 million profit recorded in the same period the previous year. The company has also narrowed its full-year EBITDA (earnings before interest, tax, depreciation, and amortisation) outlook to a range of $240 million to $250 million, from the previous guidance of $240 million to $260 million.

This material is an AI-assisted summary based on publicly available sources and may contain inaccuracies. For the original and full details, please refer to the source link. Based on materials by Iain Esau. All rights to the original text and images remain with their respective rights holders.

14 November 2025

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