Ophir Sees Fortuna Airborne This Year
UK independent Ophir Energy expects its Fortuna LNG project to be "airborne this year," CEO Nick Cooper told Malcolm Graham-Wood in an interview broadcast by Core Finance March 22 that covered the company's other assets too.
Cooper also said he was hopeful that if the oil price stays where it is – close to $70/barrel for Dated Brent – then its other African, non-operated asset offshore Tanzania could also take a final investment decision soon.
Ophir's Fortuna floating LNG project off Equatorial Guinea based on a resource of 3.7 trillion ft³ had expected to take a final investment decision (FID) last year but missed two deadlines, for which the operator was 'pilloried," Cooper said. "We underestimated the financing side," he said, as the company was trying to borrow from a risk-averse lending market at a time when everyone else with an LNG project was pulling in their horns.
Low oil prices meant many projects could not succeed at low prices, he said, and a second problem was the new technology: floating liquefaction is not yet a reality, the Shell-operated Prelude plant being delayed until later this year. So three to four years ago, Ophir could have put Fortuna on hold and concentrated on its assets in Thailand and Indonesia instead – long-life assets that break even at $12/barrel, he said.
However, gas production from Equatorial Guinea was very cheap and easy: he said the gas is "cleaner than what comes out of your cooker." He said Fortuna would have the lowest cost LNG anywhere outside Qatar, and so the company said it thought it had what was needed to succeed.
However despite locking in low construction costs and securing government and other approvals and an offtaker agreement, banks did not want to lend; and there were questions between the stakeholders about allocation of risk, he said. With ten parties in the value chain, risk sharing between the government, the partners, the offtakers and the construction companies is also problematic.
Reluctant to make further predictions on the date for FID, he said: "There is a very good chance of getting the project airborne this year."
Ophir's Tanzania asset is a 20% interest in the 15 trillion ft3 (gross resource) offshore Blocks 1 and 4 now operated by Shell - to which Ophir farmed out a 60% interest in 2010 - for which an LNG export project is under consideration. Most analysts though are cautious about forecasting an FID on the venture this side of 2020.