Thailand's PTTEP is advancing a tender process for a potential replacement floating production, storage and offloading (FPSO) vessel for the Kikeh oil and gas field offshore Malaysia, with a new conversion appearing more likely than extending the life of the existing, ageing unit. The decision is driven by the approaching January 2028 expiry of the current FPSO contract and the technical and cost challenges associated with a major refurbishment of the nearly 50-year-old hull.

Bidding Process and Key Contractors

At least two rival bidding groups submitted a third round of revised commercial offers in late November. The bidders are a pairing of India’s Shapoorji Pallonji Energy with Malaysia’s MTC, and a team comprising Singapore-based HBA Future Energy with Malaysia’s Epoms. PTTEP is aiming to further optimize costs and is expected to make a final decision within months. While the operator continues to engage with the existing FPSO contractor, MISC, regarding a potential life extension, multiple sources indicate a new replacement vessel is the most probable outcome.

Project and Vessel Specifications

The Kikeh field is Malaysia's first deepwater oil project, located in Block K offshore Sabah. A replacement FPSO would be significantly smaller than the current vessel, with estimated production capacity of 40,000 to 46,000 barrels per day of oil and gas handling of up to 90 million cubic feet per day. In contrast, the existing FPSO can produce 120,000 bpd of oil and 150 MMcfd of gas and has a storage capacity of 2 million barrels. The current unit, which features an external turret mooring system, was converted from a tanker at a Malaysian shipyard.

Challenges and Requirements

The tender faces several challenges. Most Chinese fabrication yards have declined to support the key contractors, reportedly due to the project's location near the controversial nine-dash line in the South China Sea. Their absence could increase project costs by forcing bidders to explore conversion or fabrication options outside China. Furthermore, topsides for the new vessel are mandated to be built within Malaysia to comply with local content and Petronas licence requirements. Sources note that no option is entirely ruled out, including MISC potentially providing a substitute vessel to minimize downtime if a refurbishment proceeds.

Related Project Activity

Separately, McDermott International was awarded a contract worth up to $50 million last year for the Kikeh subsea gas lift project, which will enable gas delivery to a subsea production system tied back to the Kikeh FPSO.