Saudi Arabia - joining the dots

A series of blog entries exploring Saudi Arabia's role in the oil markets with a brief look at the history of the royal family and politics that dictate and influence the Kingdom's oil policy

AIM - Assets In Market

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Iran negotiations - is the end nigh?

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Yemen: The Islamic Chessboard?

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Acquisition Criteria

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Valuation Series

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Showing posts with label Fortuna. Show all posts
Showing posts with label Fortuna. Show all posts

Thursday 12 July 2018

Ophir lost in space



Ophir’s Equatorial Guinea Fortuna FLNG project faces further uncertainty as the government threatens to pass the Block R licence which contains the gas field to another company in December when it expires. It has given Ophir an ultimatum to present a firm financing plan and progress the FLNG project.

The FLNG concept is still relatively new technology and together with the geography, Ophir has found it challenging to raise bank financing or secure partners over the past few years when the global LNG outlook was uncertain. With the improving LNG demand outlook, Ophir now faces competition from US LNG which has accelerated miles ahead.

The government has not named who it will pass the licence to in December, but this could be the likes of Perenco, who started export at its own FLNG project in Cameroon earlier this year, or Kosmos who is pursuing the Tortue FLNG project with BP in Mauritania/Senegal.

Shortly after the government’s intention were made public, Ophir announced that it had entered into a farm-out agreement on its EG-24 licence in Equatorial Guinea to Kosmos, further lending credence to the hinted company being Kosmos. Under the farm-out, Kosmos will acquire a 40% non-operated interest and fully carry the cost of a block 3D seismic survey. For Kosmos, the deal supplements its recently acquired positions in Okume and Ceiba back in 2017.




Friday 29 April 2016

Ophir's Fortuna farm-out terminated


On 29th April 2016, Ophir announced that it had terminated its Fortuna farm-out discussions with Schlumberger. Back in January, Ophir announced that it had entered into a non-binding Heads of Terms Agreement with Schlumberger for upstream participation in the Fortuna FLNG development that would result in the oilfield service company carrying Ophir to first oil. However, the two companies have been unable to complete the transaction on the terms agreed and discussions have been terminated.

Ophir’s management must now demonstrate its continued confidence in its ability to attract an alternative partner for the FLNG project. Although development costs have continued to fall as studies continue, reservations still exist about any plans for Ophir to self-fund and sole risk this development.

Having completed the upstream FEED studies, gross upstream capex requirement from FID to first gas has been reduced again, to USD450-500million from USD600million. Ophir continues to progress the project, and fully-termed LNG sales agreements are nearing completion. Offtake selection has progressed to a decision between three alternative solutions. But given additional time is required to fully develop these options to binding agreements, FID has been pushed back to Q4 2016 with first gas now forecast for 2020.