Ophir Boosts Indonesia Prospects, Fortuna Lags
UK independent Ophir's target start-up date for its Fortuna floating liquefaction (FLNG) project offshore West Africa has slipped further, but the company had good news from Indonesia where it has agreed a higher gas sales price to state power utility PLN.
Ophir said in annual results March 7 that it agreed a higher price last month from its Kerandan field, Indonesia with state PLN. The agreement in principle means it will now be $5.65/mn Btu, up from $5.08/mn Btu. The recently acquired 3D seismic on the asset have also enabled the start of negotiations with PLN for a second gas sales agreement to potentially double production from the asset by 2020.
Ophir said its production averaged 11,700 barrels of oil equivalent/day. Production in 2018 is expected to average 11,500 boe/d with infill drilling taking place on Bualuang in 2H 2018. In 2019-20, we expect material production growth from our next phases of development on Bualuang and Kerendan.
With an eye on costs, its exploration portfolio has been refocused to deliver exploration around existing infrastructure to complement recently acquired acreage in Mexico and Equatorial Guinea, it said. It relinquished seven deep water licences in Africa and Asia in 2017.
The company said completion of project financing on the $2bn Fortuna FLNG project has taken longer than expected – a trio of Chinese banks are no longer interested in lending up to 60% of the cost – but all other milestones were achieved in 2017 with the signing of the Umbrella Agreement; the nomination of Gunvor as preferred supplier for the entire LNG offtake; and the award of upstream and midstream construction contracts. In December the company expected to agree finance early this year.
Ophir also confirmed it is now "working towards reaching first gas in 2022", rather than in 2020 or 2021 as it had previously stated when its targeted final investment decision was expected 2016 or 2017.
"An annual global LNG demand growth of around 4%-5%, combined with a forecast slowing of LNG supply growth beyond 2020 and a tightening supply/demand balance has positioned Fortuna well as it enters production from 2022," it told investors March 7, adding that the Golar-owned vessel that would be converted into the Fortuna FLNG producer ship, Gandria, is expected to enter the Keppel shipyard early March 2018 to commence early works.