American upstream oil and gas company Kosmos Energy has commenced the process of scaling down its stake in the lucrative Greater Tortue Anheyim gas project on the Senegal/Mauritania maritime border as the Dallas-based firm seeks to entrench its position on even more strategic offshore resource assets in West Africa.
Company chairman and chief executive officer Andrew G. Inglis said on Monday Kosmos Energy, which also has a foothold in Ghana and Suriname, has received “significant industry interest” following its intention to sell down its position in Mauritania and Senegal to around 10%.
“We have commenced a formal process, with bids expected by the end of summer,” he said during the release of 2019 first quarter results.
Earlier, Inglis had confirmed “Kosmos has received unsolicited interest from a number of third parties concerning Tortue and our wider Mauritania and Senegal discoveries.”
He told shareholders as he announced the 2018 full year results, the company management believes “now is the right time to reduce our position given the increased scale of this strategic resource.”
“We intend to retain around a 10% working interest across the basin, or equivalent to 5-10 trillion cubic feet in resource and around 3 MTPA of LNG capacity – a highly material stake for Kosmos,” he said.
Inglis was optimistic that with Kosmos Energy’s original BP carry still in place “the goal is for Mauritania and Senegal to provide a self-funded, longterm, growing source of cash flow for the company.”
Kosmos, had in 2016 signed an agreement with London-based British multinational oil and gas company, BP, to co-develop the Greater Tortue project, the deepest offshore project in Africa, which is sandwiched between Block C8 in Mauritania and Ahmeyim gas field in Saint-Louis Profond Block offshore Senegal.
Kosmos owns a 20% stake in Block C8, a 30% in in Profond Block and 29% in Tortue complex project. Other partners are BP with a 62%, 60% and 61% stake in three operations respectively. National oil companies Petrosen and SMHPM for Senegal and Mauritania have a 10% in their respective blocks and a 5% stake apiece in Tortue. With commercial gas discovery both Petrosen and SMHPM are at liberty to increase the share of their carried interest by additional 10% and 4% respectively.
The move by Kosmos Energy to reduce its interest in the Senegal/Mauritania project comes at a time when nearly all major contractors have been awarded for the first phase that involve the production of gas from deep-water subsea systems and mid-water FPSO to a floating liquefied natural gas facility at a nearby hub located on the Mauritania/Senegal maritime border according to previous reports by Kosmos.
BP, which took over operatorship of the Mauritania and Senegal assets from Kosmos in 2018, had earlier in March picked a contractor for the subsea umbilicals, risers and flowlines (SURF) and also subsea production system equipment as the gas project’s construction activity kicked off.
Integrated provider of energy technology, engineering and construction solutions, McDermott, was picked as the preferred bidder for the SURF works while fullstream provider of integrated oilfield products, services and digital solutions, Baker Hughes, has been awarded the contract works for the subsea production system equipment.
Last month, American engineering, procurement, and construction company, KBR, was awarded the Pre-FEED services contract for Phases 2 and 3 of the Greater Tortue Ahmeyim project as focus shifts to increasing production capacity from 2.5 million tons/year in the first phase to 10 million tons of LNG both for export and domestic consumption. The gas field has an estimated 15 trillion cubic feet of natural gas with the first commercial gas for sale expected in 2022 and already BP Gas Marketing has been picked as the preferred LNG offtaker.
When the scaling down of Kosmos Energy’s interest in the Mauritania/Senegal project is complete, the company is expected to concentrate on progressing of the world class gas hubs of Bir Allah offshore Mauritania and Yakaar- Teranga offshore Senegal.
Kosmos, which anticipates $1 billion of free cash flow to 2021 with projected annual growth in production of about 8-10%, said earlier it plans to drill an appraisal well offshore Mauritania near the Bir Allah gas discovery “as part of an effort to confirm the resource base.” The company had in November 2015 completed the Marsouin-1 exploration, now renamed Bir Allah, which encountered hydrocarbon pay.
Kosmos sounds confident and is exuding optimism on the back of its latest achievements such as the tripling of its production volumes from 20,000 barrels of oil equivalent/day in 2016 to 66,000 as of end of 2018.
Moreover, the London and New York listed company, has more than tripled its 2P reserves from 145 million barrels to nearly 500m barrels and the Senegal and Mauritania operations could as well be the key plunk that would transform into reality the shareholders dream of an expanded company bottom line and growth in dividend rates.