Total is expecting to finally achieve first gas on its Laggan-Tormore project in 3Q 2015, according to contractor Petrofac which is set to take a further hit on the project.
Petrofac's losses on the 125km subsea-to-shore west of Shetland development were already expected to reach US$360 million in 2014-15, Petrofac said earlier this year. Petrofac's work on the project comprises engineering, procurement, supply, construction and commissioning of the Shetland Gas Plant - the onshore receiving facility for the project - which it took on under a £800 million lump sum contract with Total.
Today, in a pre-close trading update, the firm says additional completion and pre-commissioning works are expected to lead to incremental pre-tax costs of about £30 million.
The project, which sees the development of the Laggan and Tormore gas condensate fields, has been blighted by harsh operating conditions and industrial action by workers.
Despite the announcement, Petrofac's shares were up this morning. The firm's group backlog stands at record levels of US$20.5 billion at 31 May 2015 (31 December 2014: US$18.9 billion).
Ayman Asfari, Petrofac's Group Chief Executive,commented: "We have had a good start to the year in ECOM (engineering, construction, operations and maintenance), securing more than US$4.7 billion of order intake and, putting the challenges we have faced on Laggan-Tormore to one side, the rest of our portfolio continues to perform well."
In early June, Petrofac announced it had secured a Duty Holder Support Services contract to support Oranje-Nassau Energie (ONE), as the company has become operator of the Sean gas field in the Southern North Sea. Petrofac also recently announced that it had secured a number of contract extensions in the year to date, totaling about $400 million. The largest of these awards is for the provision of operations and maintenance teams for CNR International across its North Sea assets - the three platforms in the Ninian complex; Murchison; and Tiffany - for the next five years.
The firm is also working on Ithaca Energy's FPF1 floating production facility upgrade, which has also faced delays. The facility is to be used on the Greater Stella development in the North Sea, in which Petrofac has a 20% stake. The FPF1, previously used by Hess on the Ivanhoe and Rob Roy fields in the North Sea, is undergoing work in the Remontowa yard in Poland, with first production expected mid-2016, said Petrofac today. Sailaway had originally been scheduled for 2Q 2015.
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