BW Offshore completes Barossa FPSO debt financing

BW Offshore on August 31 announced the completion of the $1.15bn project debt financing for the construction and operation of the floating production, storage and offloading (FPSO) vessel for the Barossa gas field operated by Australia’s Santos.

The combined construction and long-term debt facility has been provided by a syndicate of nine international banks. The facility will be gradually drawn over the course of the project period. The financing will become non-recourse once the FPSO has been completed and the pre-completion guarantee has been released, BW Offshore said. The facility has a tenor of 14 years with a balloon at maturity. The loan carries a base interest rate plus a 2.50% margin during construction and a 2.25% margin during the operational phase.

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Santos had awarded the Barossa FPSO contract to BW Offshore in March this year. The final investment decision to proceed with the Barossa project, located offshore the Northern Territory, was also taken in the same month.

The Barossa FPSO services contract has an initial production period of 15 years, with options to extend the production period for a further 10 years. The contract value based on the initial production period of 15 years is $4.6bn.

BW Offshore will be responsible for the engineering, procurement, construction, installation, and operation of the FPSO. The FPSO will be turret moored with a new built hull based on BW Offshore's RapidFramework design. Initial gas production from the FPSO is expected during the first half of 2025.

The Barossa development will comprise an FPSO vessel, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline. Santos had deferred the FID on Barossa last year due to a pandemic-induced oil price crash.