Ophir’s Fortuna FID slips into second half 2017

London-based oil and gas company Ophir Energy is closing in on a final investment decision (FID) for its Fortuna FLNG project offshore Equatorial Guinea, which is now set for the second half of the year.

Although the company’s previous plan entailed delivering the Fortuna FID in the “first half of the year,” then by “mid-2017,” the London-listed player informed on Wednesday the FID is now expected to be delivered in 2H 2017 as the remaining milestones are closed out with the multiple stakeholders.

As the company is working towards the FID, it is also looking to reduce costs. As reported earlier this week, one of the measures included the removal of chief operating officer position.

Nick Cooper, CEO of Ophir, commented: “We have taken certain difficult but necessary decisions to further reduce our cost base. This is now right-sized to maximize the value of our core assets in the period before the Fortuna FLNG project is on-stream. As part of the cost reduction exercise, Dr Bill Higgs will be stepping down as COO and I would like to thank Bill for his outstanding contribution to Ophir since 2014. We are closing in on the Fortuna Project FID which will start the monetization of a substantial portion of Ophir’s resource base.”

In addition, to decrease running costs, corporate roles in the London office and expatriate positions will be reduced by approximately 50%, equating to around 15% of the global workforce. According to the company, these actions are estimated to result in annual cost savings of $10-12 million, after one-off restructuring costs of $7 million. The company will, nevertheless, retain all competencies essential to the delivery of its core projects, including the remaining workstreams required to secure the FID of Fortuna, to undertake the expansion of the Asian production base and to operate Ophir’s exploration portfolio.

 

Equatorial Guinea monetization

 

Ophir noted that significant steps were accomplished in the first half of 2017 towards the FID of the Fortuna FLNG Project. Given that the remaining milestones are dependent on multiple stakeholders, it has proven difficult to precisely forecast FID timing, the company further added. However, with the strong progress seen in the first half of 2017 and the current intensive effort from all parties, Ophir currently expects FID of the Fortuna project to be achieved in the second half of 2017.

At present, the project has two milestones outstanding prior to FID: the awarding of the offtake agreements and the closing out the project debt facility. Both of these workstreams are currently being progressed with continual contact between the stakeholders to finalize the details of coordination along the value chain.

Final terms have now been agreed with a shortlist of off-takers and the 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.

Earlier this year, a construction contract was awarded for conversion of an LNG carrier to a floating liquefaction facility for the Fortuna project. The primary contract for the FLNG Gandria was entered into with Singapore’s Keppel Shipyard.

Offshore Energy Today Staff

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