London-based Ophir Energy on Wednesday said it now expects to make a final investment decision on its Fortuna FLNG project in Equatorial Guinea in the second part of this year.
Previously, Ophir and its partner, OneLNG, a joint venture between Golar LNG and Schlumberger, expected to make the final decision in mid-2017.
“Given that the remaining milestones are dependent on multiple stakeholders, it has proven difficult to precisely forecast FID timing,” Ophir said in its operations and trading update on Wednesday.
“However with the strong progress seen in the first half of 2017 and the current intensive effort from all parties, we currently expect FID of the Fortuna project to be achieved in the second half of 2017,” it added.
The FLNG project has two milestones outstanding prior to the final decision: the awarding of the offtake agreements and the closing of the project debt facility.
“Both of these workstreams are currently being progressed with continual contact between the stakeholders to finalise the details of coordination along the value chain,” Ophir said.
According to Ophir, final terms have now been agreed with a shortlist of off-takers and the FLNG project stakeholders are currently evaluating which of these offers to accept.
These offers comprise Brent linked contracts. Principle commercial terms have been agreed with a consortium of three China-based banks for the debt facility and documentation is being completed.
“Once the offtake decision and debt facility have been agreed, the board of Ophir will be in the position to take the FID, which will also be subject to approval by Ophir’s shareholders and the President of Equatorial Guinea,” the company said.
Ophir’s board has recently moved to further reduce the company’s underlying cost base in recognition of “limited signs of an oil price recovery, and of lower exploration activity.”
As reported earlier this week, Ophir announced its current chief operating officer William Higgs will be stepping down due to the company’s cost reduction measures.
“Ophir’s goal of becoming a sustainable exploration company remains in place and it is forecast that Ophir’s cash flow generation will support the drilling of 2-3 exploration wells per annum when the Fortuna FLNG project is on-stream in 2020,” the company said in the operations update.
Prior to that, Ophir’s discretionary spend will be paced in order to preserve balance sheet capacity, thereby prioritising the Fortuna FLNG project and the expansion of Ophir’s Asian producing assets, it added.
To decrease running costs, corporate roles in the London office and expatriate positions will be reduced by approximately 50 percent or about 15 percent of the company’s global workforce.
These actions are estimated to result in annual cost savings of $10-12 million, after one-off restructuring costs of $7 million, according to Ophir.
The company will, nevertheless, retain all competencies essential to the delivery of its core projects, including the remaining workstreams required to secure the final decision of Fortuna, to undertake the expansion of the Asian production base and to operate Ophir’s exploration portfolio.
LNG World News Staff