LONDON (Alliance News) - Ophir Energy PLC on Wednesday said some of its potential offtake partners for the Fortuna project have offered to prepay for the gas they purchase which could pay for up to half of Ophir's costs to first gas, and said the overall capital cost has fallen by a quarter.
Ophir has signed heads of agreements with six parties which could potentially purchase the company's liquefied natural gas produced from the Fortuna floating liquefied natural gas project offshore Equatorial Guinea in West Africa.
Ophir said all six parties are "established LNG buyers" from Europe and Asia, and said the amount of LNG requested under the heads of agreements has exceeded its offtake capacity. Ophir is aiming to sell 2.2 million tonnes per year of LNG through offtake agreements.
"Each offtaker's proposal offers something different, thereby providing Ophir with a range of pricing formulae and differing commodity risk profiles which will be helpful when we narrow down the short list in the first quarter of 2016," said Chief Executive Nick Cooper.
Importantly, the company has secured "additional elements" to the offtake deals that will be of significant help to Ophir as it develops the Fortuna floating liquefied natural gas project to first gas. Those elements include the offer from the parties to prepay for the LNG volumes purchased which could cover 30% to 50% of Ophir's total net cost to first gas, it said.
Ophir said the offtake agreements could therefore be a "major contributor" toward funding the project.
Additionally, gross capital expenditure to take the the Fortuna project to first gas has also been revised downward to only USD600.0 million from its previous guidance of USD800.0 million, of which Ophir will be liable for USD480.0 million with its 80% stake in the project compared to the original estimate of USD640.0 million.
The adjustments were made after analysing the ongoing upstream work and getting the front-end engineering and design process to the halfway stage.
"We are also pleased to report that the estimated cost to first gas has been reduced by a further 25% during FEED. 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," said Cooper.
Ophir also has contracted Fugro to perform geotechnical, environmental and metocean surveys for the Fortuna project. Fugro has deployed three vessels to conduct the work, which will begin in January. Fugro, founded in the Netherlands in 1962, collects and provides technical data to the natural resources sector that is needed to design, construct and maintain projects.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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