OneLNG collapse rocks Fortuna FLNG plan

05 June 2018, Week 22, Issue 742

Golar LNG and Schlumberger have pulled out of the OneLNG venture in yet another misfortune for Ophir Energy’s Fortuna LNG project, offshore Equatorial Guinea. Despite this, Ophir is pushing on with its floating LNG (FLNG) project, saying it has held talks with other potential partners, of whom, Golar remains interested in working on the plan. 

OneLNG, in which Golar had 51% and Schlumberger 49%, will be wound down, Golar said, on May 31. The company said Fortuna had been unable to finalise a debt financing package, despite 12 months of work on it. As a result, Schlumberger opted to withdraw, bringing the joint venture down. Schlumberger and Golar may still work on FLNG projects on a “case-by-case basis”, Golar said. 

Golar went on to say new equity would be unlikely to be the option to finance Fortuna, but that using an alternative yard and a potential new partner were being considered. A different yard may be able to provide financing for construction work, Golar said. No more updates will be given on the project, it continued, until a financing alternative is fully committed. 

Ophir formed a joint operating company with OneLNG in November 2016. Under this agreement, OneLNG had a 66.2% stake and Ophir had 33.8% in the company, which was to handle the financing, construction, development and operation of Fortuna. From the final investment decision (FID), it was to hold Ophir’s stake in Block R and the Gandria FLNG vessel. 

Despite Schlumberger’s withdrawal, Ophir remained upbeat. The operator, and Golar, are in continuing talks on financing the project. Furthermore, Ophir said that – as part of its contingency planning – it had held talks with other potential partners and that, “we have now formalised discussions and are actively moving forward with them”.

While the London-listed operator continues to push its Fortuna plan, the prospects for its success are suffering. Talks with Chinese financiers fell apart, in part over questions of where the LNG would go, and banks are cautious on lending the required funds, partly because of FLNG’s lack of proven success. 

Ophir is running out of time at Fortuna as its licence on Block R, home of the gas field, is due to expire in December. If the company cannot demonstrate progress by that point, Malabo may award the licence to another party. One alternative to the FLNG plan is the construction of a subsea pipeline to the island of Bioko, where an existing LNG plant is in operation. 

 

West Africa

While Fortuna is struggling, Golar has made FLNG progress at two other projects in the region, in Cameroon with Perenco and in Mauritania-Senegal with BP. 

The Hilli Episeyo vessel produced first LNG in mid-March, for Perenco, reaching stable production by late April and despatching an initial 138,000 cubic metre cargo to China. The vessel has been officially accepted, Golar said on June 4, and a second cargo has also been offloaded. The tolling deal provides the LNG company with US$164 million per year in EBITDA, with an additional operating cash flow stream, estimated to provide US$45 million, based on Brent prices of US$75 per barrel.

As of the end of March, spending on the Hilli Episeyo vessel – including conversion and commissioning – had reached US$1.05 billion. The Hilli Episeyo is a sister vessel of the Gandria, which will go to work on the Fortuna plan. 

As a result of this Cameroon FLNG project, which Golar described as the “world's first low cost FLNG facility”, it has struck a heads of terms agreement with BP for a similar vessel to work on the Greater Tortue/Ahmeyim project. Under this, Golar will commit to progress on a front-end engineering and design (FEED) study and prepare for a vessel conversion, with an FID expected by the end of 2018. The deal includes an option for a second FLNG vessel. 

 

Edited by

Ed Reed

Editor

Any questions? Please get in touch