Petroleum Africa
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Wednesday, May 6, 2015
Ophir Energy signed a binding heads of terms for a midstream chartering and operating services agreement with Golar LNG with the agreement of GEPetrol, its partner on Equatorial Guinea’s Block R. The agreement establishes the key commercial terms for Golar to build, operate and maintain the floating liquefaction and storage vessel and facilities at Block R’s Fortuna FLNG project.
Nick Cooper, Chief Executive of Ophir Energy, commented, “Finalizing our midstream partner is a significant step forward for the Fortuna FLNG project. This agreement accelerates the date of first gas and reduces costs in a critical part of the value chain. We believe the terms of the agreement allow the project to deliver LNG at attractive returns into both Pacific Basin and Atlantic Basin LNG customers. The agreement completes the value chain economics and allows Ophir to confidently plan for first gas, and c. 67,000 boepd of production by mid-2019.
“At a time when many other greenfield LNG projects are decelerating, Ophir has elected to accelerate the Fortuna FLNG Project to secure what we believe will be a better market opportunity at first gas, and to lock in anticipated reductions in upstream development costs. We will now move immediately into the define phase of the upstream and midstream projects with a view to reaching Final Investment Decision (FID) by mid-2016.
“We are pleased to have secured Golar as a partner; the firm is a leading provider of FLNG solutions and the flexible, competitive commercial terms we have agreed will ensure that FID can be taken at current LNG prices. Ophir sees many parallels with the emergence of leased FPSOs approximately 25 years ago for oil developments. The re-fitting of vessels and leasing them to independent E&P companies in an oil field context both unlocked a series of oil assets and also provided competitive advantage to those early adopters of the technology. Ophir believes that the same is now about to happen in a gas field context for FLNG.”
Golar will operate the Gimi under a 20-year charter term. During this period it will be responsible for the sub-sea well control, receiving, liquefying and offloading the gas to LNG vessels. Ophir, as the operator of the upstream component of the project, will lease the Gimi. Ophir’s responsibility will be to construct and build the sub-sea facilities, drill the development wells, manage the performance of the reservoirs and, together with the Ministry of Energy and Sonagas, to market the gas on behalf of all upstream parties.
Golar, with its partners Keppel Shipyard and Black and Veatch have previously committed to the Gimi FLNG conversion in December 2014. The Gimi is expected to have an annual average capacity of 2.2 mtpa at a reservoir production rate of up to 400,000 mscfd (c. 67,000boepd) with first gas expected mid-2019. Ophir and Golar have agreed a vessel charter rate that is competitive with US liquefaction tolls and that ensures that the Fortuna LNG project is delivered at the low end of the cost curve for LNG projects.
The Fortuna FLNG project will now move into the full definition phase and Ophir has recently appointed Worley Parsons as owners engineer to the project. The midstream FEED is expected to be completed by end-2015 and the upstream FEED is expected to be completed in Q2 2016. The project is planned to reach FID by mid-2016, at which point Ophir, Golar, and GEPetrol intend to have signed a fully termed charter agreement based upon these heads of terms.
The previous agreement between Ophir and Excelerate Energy has been terminated by mutual agreement.
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