Australia’s FAR Limited has signed a binding Memorandum of Understanding (MoU) with Glencore for the full allocation of the company’s share of crude oil from the Sangomar field, located offshore Senegal.
The binding MoU between FAR and Glencore, which is subject to the negotiation of final documentation consistent with industry standards, provides FAR with access to the extensive marketing and offtake resources of one of the world’s leading marketers of crude oil, FAR said on Wednesday.
FAR said it would benefit from Glencore’s global network and multi-decades expertise in the oil and gas landscape, including access to Glencore’s track record in successfully creating markets for new qualities of crudes, thereby maximizing the intrinsic value of the Sangomar barrels.
Provided Glencore remains a lender to FAR, the offtake is expected to be for a period of seven years following first oil with a minimum of 20 million barrels – representing FAR’s share of the project – expected to be produced during that time.
To remind, FAR has recently received final credit approvals for an underwritten $300 million senior secured reserve-based lending facility for the Sangomar development, by Macquarie Bank Limited, BNP Paribas, and Glencore.
Following the final investment decisions by the Sangomar Joint Venture partners and FAR’s $300 million lending facility, FAR said that Woodside, the operator, has reported that the full notice to proceed has been issued to the key contractors for the beginning of the Sangomar field development.
Orders have been placed for long lead items for the drilling and related completions, with drilling planned to start at the end of 1Q 2021.
Diamond Offshore has been awarded the contract for the development drilling, including an additional evaluation well on either the FAN or SNE North discoveries, prior to the start of the development drilling. The final location will be chosen during 2020 following the processing and interpretation of the recently acquired 3D seismic data over the development, FAN and SNE North areas. The processing of this new data is progressing to schedule.
The Sangomar Development Phase 1 capital expenditure and operating expenditure estimates remain unchanged from those presented in the Exploitation Plan submission in October 2019.
Work continues on plans for development of the gas in the Sangomar field and a concept select decision is likely to be made by the JV in 3Q of this year.
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