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Offshore Oil and Gas Fabrication Costs (Productivity and Complexity/ West Africa vs. Korea)


Fabrication costs for the offshore oil and gas industry vary greatly. The two most important factors by far to consider are the location of the project and the complexity of the project. In the case of location factor a suction pile fabricated in the middle east could cost say $5,000/ tonne (FY 2011), whereas in western Africa $15,000/ tonne and upwards. Regarding complexity for example a complex FPSO topside could cost three to five times as much as a simple suction pile.


While the rise in cost per tonne according to increased complexity is fairly understandable, one might wonder why there would such a dramatic increase in cost per tonne due to project location. And surprisingly this will still hold true even if a significant portion of the project was to be fabricated elsewhere and then shipped back to the project location.


The reason for the much higher costs (in particular when comparing western Africa versus Korea or China) is primarily twofold (though many other factors do apply): lack of infrastructure and low productivity (2 to 4 times factor/ multiplier versus US/ UK productivity). Fabricating in Nigeria is difficult and expensive, though it must be admitted that under the right conditions the potential is enormous as the Nigerian workforce (this is subjective and many of my colleagues would differ in opinion) is more eager to expand and improve their skill set than many of their international counterparts. Also more often than not the lack of productivity is due to very poor facilities and equipment, frequently in disrepair.


What could then make fabrication in Nigeria more competitive internationally? Given the opportunity to start from scratch with potential governmental incentives and the large number of offshore oil and gas projects to be awarded regionally: a very substantial investment in a brand new yard, with new equipment, experienced expatriate staff and very critical – carefully selected, trained and renumarated local management and craftsmen.


To summarize, oil and gas offshore fabrication costs (to be used as a very rough indicative guideline) are as follows:


Simple structures (e.g. suction piles): $5,000/ tonne - $15,000/ tonne

Medium complexity structures (e.g. jackets): $10,000/ tonne - $20,000/ tonne

Complex structures (e.g. FPSO topsides): $25,000/ tonne - $40,000/ tonne



*note: above data from various public data sources as well as from personal direct experience.

Offshore Fabrication Costs

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