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Thursday, December 10, 2015
Ophir Energy entered into HoAs for LNG offtake from its Fortuna FLNG project offshore Equatorial Guinea. The HoAs, with six counterparties, are with established LNG buyers for the European and Asian markets.
Furthermore, the management estimate of the gross capital expenditure required to first gas has been revised downwards from $800 million to $600 million based on recent input from the ongoing upstream FEED work.
Ophir is selling 2.2 mtpa of LNG offtake, although the total demand requested under the HoAs has seen the offtake sold several times over. The HoAs are based on a variety of different pricing constructs with formulae that consist of either European gas market netbacks, oil indexation, or a combination of both and in some cases include the provision of a floor price. Offtake under several of the HoAs also incorporates a sharing of incremental diversion income earned above the base contract formula for LNG volumes that are subsequently sold into higher value markets.
As well as pricing structure, Ophir has secured additional elements to its LNG offtake HoAs that are significant for the development of the project. These include the offer to pre-pay for LNG volumes in substantial quantities over the early years of the contract. The funds received from pre-payments could cover 30%-50% of Ophir’s total net cost to first gas and could therefore be a major contributor towards funding of the project.
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