Cairn and FAR have announced a material increase in the capex for the SNE development from USD2.2 billion to USD3.7 billion (plus USD500 million contingency) for Phase 1. This has been driven by the partners' decision to buy an FPSO rather than lease it. This does however bring the opex down, estimated form c.USD14/boe to c.USD11/boe.
FID is expected to be taken at the end of 2019 with first oil forecast for late 2022. The development will be phased with Phase 1 targeting 230mmbbl and production of 100mbopd. Phase 2 will target a further 253mmbbl oil.
This is a particularly tough week for Cairn having earlier announced a dry hole in Mexico at Alom-1 and the Indian arbitration award delayed into summer 2020, while now also being exposed to larger capex on SNE.
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