Ophir Energy appoints Golar LNG for midstream services in Equatorial Guinea

LNG carrierThe Gimi is expected to have an annual average capacity of 2.2mn tonnes per annum at a reservoir production rate of up to 67,000 boepd with first gas expected mid-2019. (Image source: Ken Hodge/Flickr)Ophir Energy and partner GEPetrol has signed a binding heads of terms for a midstream chartering and operating services agreement with Golar LNG for Block R in Equatorial Guinea

According to the agreement, Golar LNG will build, operate and maintain the floating liquefaction and storage vessel Gimi and facilities at Ophir Energy’s operated Fortuna floating liquefied natural gas (FLNG) project in the offshore block.

Ophir Energy CEO Nick Cooper said, “Finalising our midstream partner is a significant step forward for the Fortuna FLNG project. This agreement accelerates the date of first gas and reduces costs in a critical part of the value chain. We believe the terms of the agreement allow the project to deliver LNG at attractive returns into both Pacific Basin and Atlantic Basin LNG customers. The agreement completes the value chain economics and allows Ophir to confidently plan for first gas, and 67,000 boepd of production by mid-2019.

“Ophir Energy is pleased to have secured Golar as a partner; the firm is a leading provider of FLNG solutions and the flexible, competitive commercial terms we have agreed will ensure that the final investment decision (FID) can be taken at current LNG prices. We see many parallels with the emergence of leased FPSOs approximately 25 years ago for oil developments. The re-fitting of vessels and leasing them to independent E&P companies in an oilfield context both unlocked a series of oil assets and also provided competitive advantage to those early adopters of the technology. Ophir Energy believes that the same is now about to happen in a gas field context for FLNG.”

Golar LNG will operate the Gimi under a twenty-year charter term. During this period, it will be responsible for the subsea well control, receiving, liquefying and offloading the gas to LNG vessels. Operator Ophir Energy will lease the Gimi and construct and build the subsea facilities, drill the development wells, manage the performance of the reservoirs and, together with the country’s Ministry of Energy and Sonagas, to market the gas on behalf of all upstream parties.

The Gimi is expected to have an annual average capacity of 2.2mn tonnes per annum at a reservoir production rate of up to 67,000 boepd with first gas expected mid-2019. Ophir Energy and Golar LNG have agreed a vessel charter rate that is competitive with USA liquefaction tolls and that ensures that the Fortuna LNG project is delivered at the low end of the cost curve for LNG projects.

Ophir Energy also recently appointed Worley Parsons as Owners Engineer to the project. The midstream front end engineering and design (FEED) is expected to be completed by end-2015 and the upstream FEED is expected to be completed in Q2 2016. The project is planned to reach FID by mid-2016, at which point Ophir Energy, Golar LNG and GEPetrol intend to have signed a fully termed charter agreement based upon these heads of terms.

Golar LNG CEO Gary Smith added, “Golar is delighted to have secured a contract for our second GoFLNG vessel. This commitment with Ophir Energy and GEPetrol to employ a GoFLNG vessel in Equatorial Guinea represents a further step in the implementation of Golar LNG’s strategy to become the industry’s leading integrated midstream LNG services provider, supporting resource owners, gas producers and gas consumers.

“Our new approach to developing LNG projects is stimulating significant interest today. Accordingly, Golar has now, based on its framework agreement with Keppel, commenced negotiations for the company’s third GoFLNG vessel.”

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