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Hey Cyan, yes I saw that comment, not too surprising to us all really. That FEED will be thoroughly scrutinised, and possibley adjusted.
HE just do not need to rush it at all.
But to commit to more exploration in different parts of a increasing hostile world i.e. to try and find another Sea Lion seems unlikely??.????
Does the Zama issues play into the 2022 time line.
If they do not sell Zama, they will have to pay up for their % of development.
We of course would assume that is the feedback from HE after being asked by RKH.
Rgds Sft
Good morning Surfit
you wrote; "Hey Cyan, good to see you back and here. ADFN has descended into chaos."
Thanks. ADVFN has indeed gone down hill with repetitive nonsense.
No huge surprises from the results at first glance. Our fate is not in our hands . We have a bit of a wait if RKH management are right in their prediction;
" management's base case forecast assumes a final investment decision on the Sea Lion development during 2022, with the Group's costs funded by Premier/Harbour and/or Navitas during this period."
Precisely.
In the same way that Boris would never hand the FI over to Argentina, nor would any UK strategic vision for the FI be publicly discussed, so the public discussion will only be about the commercial prospects for oil/gas production.
That doesn't mean that hidden behind the scenes some influence being applied to achieve other objectives, if considered desirable, including what Ralph posted.
Bugger me, Ralph, are we agreeing again? Is this the start of a beautiful friendship? !!
Hey Cyan, good to see you back and here. ADFN has descended into chaos. It was essential yours and sch Corner. But thankfully LSE has rided itself of those elements at ADFN cost.
My opinion is HE could push/negotiate for that tax holiday up to project break even and then acccept an extra % there after.
That way is a potential appeasement for both side's. The grit will be in the post %.
FiG must know its now or never.
Rgds Sft
Years ago wasn't there a rumour that the US wanted a sub base at the FI ?
Correction: The commercial imperative for HBR DOESN'T mean that other interests count for nothing.
Slight difference to what I posted earlier and may have confused some!
I reckon the UK and the US would be very pleased to have a foothold in that part of the World.
It might not be worth fighting a war to get hold of it, but if you've already got it and this time not abandoned it, leaving Argentina to believe that you've lost interest in it, then I'd want to hang on to it, irrespective of oil/gas reserves. But that costs money.
However, if you've got some oil/gas revenue, you could turn a somewhat remote dot on the map into a pretty valuable asset in a very uncertain World.
My favourite idea to get things moving is for the FIG to offer a tax holiday; All oil produced before 2028 will be entirely tax free; what an incentive to encourage early, fast development. One can but dream lol.
Totally agree with all that: profit is all that counts for HBR, but that doesn't mean that a post-Brexit Britain in an increasingly China-dominated World wouldn't want a decent foothold in that region.
The commercial imperative for HBR does mean that other interests count for nothing.
I have to agreed with Cyan, I think Harbour will be strong arming FIG on the royalty or some other mechanism to cut the tax bill. Maybe a sliding scale that has a royalty of $9 when oil is above $60 a barrel but comes down a $1 for every $5 below $60 a barrel or something similar, it would make sense and protects the project viability in an uncertain future.
Harbour can say they will walk away if they don't get some flexibility as we are entering a new world where fossil fuel is demonised too far, we need plenty of oil to power the transition and Harbour are well aware of this, but if FIG really what SL to go ahead they need the press the green button soon and get FID sorted, otherwise a year or two passes and SL will be left behind as who else is going to fund a project as the twilight of oil races towards us.
LTT
We have a military presence which has never depended on the FIG to fund.
I really do not see the Falklands of significant strategic importance.
Whether oil is ever commercially progressed depends simply on the economic case; whether the numbers work.
However, there is another consideration in a rapidly changing World power struggle (with China looking to take over from the US), which is a new strategic role for the FI.
The strategic importance of the FI was largely abandoned by the British, once the Panama Canal was finished, but could there be a growing need to have a substantial foothold in that region?
If so, then while the UKEF funding for SL may now be a dead duck, with Boris chairing COP-26 later this year, but the post-Brexit strategists may still wish to have such strategic presence in the region, with oil/gas just the thing to help fund it? In which case, Government funding may seep its way into the FI by other routes than via UKEF.
Certainly a thought worth considering as the Falklands War 40th anniversary approaches.
The only reason for Harbour to take out RKH is if they are definitely going ahead. looking at the timescales; it appears that the award will come well before any development decision.
I think Harbour will want to renegotiate terms with the FIG and knock at least $5 off the $9 royalty.
The RKH capital tax bill will have to be part of the discussions. The CGT would drop away IF the existing Navitas deal is progressed and agreed by the FIG.
I think Navitas will drop out of the picture IF harbour really wants to progress SL.
Navitas was, effectively, only offering circa $250 m of development capital and loan support for 30% of SL which cost $1.1 Billion to appraise; effectively they got a pass on $300m of appraisal costs.
IF harbour take out RKH it will be for paper , imo, not cash , and after a sizable OM award.
Best case could see $200m (OM award cash) then available to replace the Navitas contribution.
cyan2,
Wouldn't it make more sense for HE to take Rockhopper out now ? They could use Navitas's money for the FIG tax bill. Its going to cost them a lot more to buyout Rockhopper after any award even if small.
There does need to be radical changes as to how SEALION may be financed. Its clear we can rule out government support which Durrant relied on from UKEF; the rules have changed.
hTTps://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/975753/Guidance_-_Aligning_UK_international_support_for_the_clean_energy_transition_-_March_2021_.pdf
Cost savings need to be made and new ways to finance. I very much doubt that Navitas will remain in the mix IF harbour wants to proceed.
The smart move by Harbour would also be to take RKH out after the OM award is made. Its just possible RKH might have a useful cash pile to add to the development financing needs.
Remains all very high risk here at least until the award comes through, imo.
Gents no disrespect but talking about an FPSO Vessel is important but its just a product of FEED: Deigned / suitability for the environmental, subsea assets and offloading environmental constraints.
It's important but just experienced engineering.
Remote but nothing bigger than WOS.
Focus on HE'S cash for development (imo): dividend, debt reduction, geo political, PoO, HE remaining reservoir, port / contract servicing and fig infrastructure ( bunkersing and supplies), crew changing (hotels and what about heliport infrastructure), island project and port eqipment resupply and storage.
We have no idea or indication what PMO reported (ridiculous) 1billion FEED has considered?
He will not reassess this quickly, to suit RKH or FiG.
Rgds Sft
I believe BW Offshore had an FPSO or two that were offline and could be used second hand. Check out Umuroa.
Good afternoon BlooBird
I am thinking "jaws" now lol. "I think we're going to need a bigger boat"
I suppose there is no particular reason why we couldn't run two IF FPSO's if the prices were right.
We are not privy to the smaller plans which PMO staff are/have prepared to submit to Harbour. I believe we WERE expecting to produce about 80,000 a day under the old plans so a 30,000 facility is clearly short. Just how much smaller is possibly being considered?
Goodness knows what the conversations are behind closed doors . Our immediate concern is getting a large OM award in the accounts; if we are lucky and have won the case.
cyan2
If SeaLion ever gets going, HUR's AokaMizu FPSO would not be big enough ... I think it can only handle 30000 bpd whereas SeaLion will hopefully be at least double that.