London-based Ophir Energy said on Friday it has terminated discussions with Schlumberger regarding the participation in the Fortuna FLNG project in Equatorial Guinea.
The two companies signed in January a non-binding agreement under which Schlumberger would receive a 40% economic interest in the Fortuna FLNG project.
Since the January announcement of the non-binding deal with Schlumberger for upstream participation, Schlumberger has completed its technical due diligence, Ophir said in statement.
However, Ophir and Schlumberger have been unable to complete the transaction on the terms agreed in the heads of terms. As such, discussions between the two companies have terminated, Ophir said.
“Notwithstanding this the project still represents a technically and financially attractive project for Ophir and its shareholders. The Schlumberger agreement was one of several options being reviewed as a basis for development of the project and delivery of value to shareholders,” the company said.
FLNG project moving forward
Ophir noted in the statement that it continues to progress the FLNG project. After completion of the upstream FEED studies, and EPCIC bids having been received as planned earlier this month, the forward upstream capex requirement from FID to first gas has been further reduced from $600mm (gross) to between $450-500mm (gross).
The company also said it has remained in active discussions with a number of other parties with regards to participation in and funding of the Fortuna FLNG project. These discussions include upstream equity participation, vendor financing and pre-sales of gas.
The company revealed that offtake selection has progressed to a decision between three alternative solutions. Fully-termed LNG sales agreements are nearing completion.
Negotiation of the mid-stream chartering agreement with Bermuda-based Golar is also nearing completion, according to Ophir.
The Development and Production plan was submitted to MMIE on schedule and in accordance with the PSC in March 2016, the company added.
Ophir said in March it was expecting to make a final investment decision on its Fortuna FLNG project in the middle of this year, with first production in the second half of 2019.
However, in light of the “additional time required to fully develop these options to reach binding agreements, we now expect to make FID during 4Q 2016 with first gas now forecast for early 2020,” the company said.
“The Fortuna project workstreams are progressing towards FID. We have been reviewing a number of options and our discussions continue with other quality counterparties that can offer an attractive source of funding. In addition, the reduction in the capex to first gas has lowered the project breakeven oil price to approximately $40 per bbl,” said Nick Cooper, CEO of Ophir.
“We continue to work closely with Golar, the prospective offtakers and the other potential partners and remain confident that we will take the FID in 2016,” Cooper added.
LNG World News Staff