Fortuna LNG Nears Offtake Agreements: Ophir
Fortuna LNG, the floating liquefaction project offshore Equatorial Guinea, west Africa, is nearing offtake agreements for the 2.5-2.8mn mt/yr plant, the CEO of operator Ophir, Nick Cooper, told the Flame conference in Amsterdam May 8. "Talks are at a critical stage, so I will be as candid as I can be," he said. An umbrella agreement (UA) was signed with the government last week, and the company hopes to line up buyers by the end of Q2.
The UA reconfirms the participation rights of state GEPetrol as partners for 20% of the upstream portion of the project, and for a future potential participation of up to 30% ownership of the midstream FLNG. Ophir's majority partners are OneLNG, a joint venture between LNG operator Golar and oilfield services company Schlumberger.
The plant is expected to produce 2.5mn mt-2.8mn mt/yr although more drilling is expected to yield enough for two similar tankers, Cooper said. Another 1.5 trillion ft³ of reserves, added to what is surplus to requirements for the first vessel, would be enough to meet 20-yr contracts for two tankers, he said.
Ophir Energy CEO Dr Nick Cooper (Photo credit: the company)
The company has had much success with the drillbit and the wells are flowing very well, and the gas is 99.7% methane, making liquefaction a relatively straightforward matter from a technological viewpoint. Metocean conditions are also favourable, he said, so while there were not the liquids that will make the economics of the Shell Prelude project so commercial, all other elements are in place that will put the project at the bottom end of the cost curve. He said the plant would be able to supply LNG to Europe for $1/mn Btu less than cargoes from the US.
Debt financing from Chinese banks will account for 60% of the $2bn costs. Cooper said that western banks had not been very forthcoming with money as they were worried about floating LNG, an untested technology. Only one plant is operational at the moment, which is owned by Petronas in Malaysian waters. The next one will be Shell's Prelude, off western Australia, whose economics have been a closely guarded secret; it will be marketing the output jointly with partner Japanese Inpex with deliveries expected to start next year. It is designed to produce 3.6mn mt/yr of LNG, plus additional liquids.
LNG analyst Anne-Sophie Corbeau of Saudi Arabia's Kapsarc institute told NGW that the market did not have the appetite for major offtake agreements stretching for decades. Small volumes, such as those that Fortuna was offering, were more attractive in an era of oversupply combined with growing flexibility.
On the eastern seaboard, offshore Mozambique, the 3.4mn mt/yr Coral FLNG project is still awaiting the final investment decision, with its financing so far proving a stumbling-block even though most of the shareholders have individually signed off on it. All the output has been sold to the UK major BP, although observers say that there is some uncertainty about the annual production volumes.
William Powell