Ophir Inks Heads of Agreement to Sell LNG from Fortuna FLNG Project in Equatorial Guinea

Ophir Energy has signed heads of agreements (HoA) for LNG offtake from the Fortuna FLNG project with six counterparties, all of whom are established LNG buyers in European and Asian markets.

Furthermore, the company’s estimate of the gross capital expenditure required to first gas has been revised downwards from $800 million to $600 million (i.e. from $640 million to $480 million net to Ophir’s 80 percent working interest) based on recent input from the ongoing upstream FEED work, Ophir said in a statement published Wednesday.

“This cost reduction, plus the offered LNG pre-payment mechanisms materially reduce the amount required to fund Ophir’s portion of the project ahead of the final investment decision in mid-2016,” Ophir CEO Nick Cooper said.

Ophir is selling 2.2 MTPA of LNG offtake, however the total demand requested under the HoAs has seen the offtake sold several times over, the company said. “The HoAs are based on a variety of different pricing constructs with formulae that consist of either European gas market netbacks, oil indexation or a combination of both and that in some cases include the provision of a floor price.”

As well as pricing structure, Ophir has secured additional elements to its LNG offtake HoAs that are significant for the development of the project. These include the offer to pre-pay for LNG volumes in substantial quantities over the early years of the contract. The funds received from pre-payments could cover 30 percent-50 percent of Ophir’s total net cost to first gas and could therefore be a major contributor towards funding of the project.

Separately, Ophir has contracted Fugro to perform geotechnical, environmental and metocean surveys for the Fortuna project.