Ophir Energy has cut its planned development cost and signed a heads of agreements for LNG offtake from its Fortuna FLNG project offshore Equatorial Guinea.
Gross capital costs on the project - due to be Africa's first floating LNG project - have been reduced from US$800 million to $600 million, based on recent input from the ongoing upstream front end engineering work, according to Ophir.
In addition, the offtake includes an offer to pre-pay for LNG volumes over the early years of the contract, which could help Ophir cover 30%-50% of its total net cost to first gas, helping fund the project, says Ophir.
The project will see the development of Ophir's assets in Block R, containing some 3.4 Tcf estimated mean recoverable resources, in 600-1950m water depth. Golar LNG was earlier contracted to build, own and operate the FLNG vessel, the Gimi. Final investment decision (FID) expected in 2016 and first gas in 2019.
Nick Cooper, Ophir's CEO, said: “We are also pleased to report that the estimated cost to first gas has been reduced by a further 25% during FEED. This cost reduction, plus the offered LNG pre-payment mechanisms materially reduce the amount required to fund Ophir’s portion of the project ahead of the FID in mid-2016.”
Ophir also thinks the project could handle a second FLNG unit, thanks an an incremental 1 Tcf of 2C resource discovered and available to be developed, and a further 900 Bcf of "low risked prospective resource." However, an investment decision on a second vessel would not be made until first gas from Fortuna, Ophir has said.
Ophir says the upstream FEED process is about 50% complete. "The project has been able to capitalize on the deflationary cost environment and has been redesigned to increase standardization of components wherever possible," it says.
Two consortia of oil services companies were selected to compete for an EPIC contract on Africa's first floating LNG project through two front end engineering and design contracts. The move has pitched McDermott Marine Construction and GE Oil & Gas against Subsea 7 and Aker Solutions.
Separately, Ophir has contracted Fugro to perform geotechnical, environmental and metocean surveys for the Fortuna project. The Fugro Searcher, Fugro Scout, and Fugro Frontier vessels have been deployed for this work, which is scheduled for completion in January 2016.
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