The Joint Operating Company
Ophir and OneLNG, a joint venture between subsidiaries of Golar LNG Limited and Schlumberger, announced on 10 November 2016 that they have signed a binding Shareholders’ Agreement to establish a Joint Operating Company (“JOC”) to develop the Fortuna project.
OneLNG and Ophir will have 66.2% and 33.8% ownership of the JOC respectively (with economic entitlements materially consistent with the equity interest in the JOC1). The JOC will facilitate the financing, construction, development and operation of the integrated Fortuna project and, from FID, will own Ophir’s share of the Block R licence and the Gandria FLNG vessel. This innovative structure aligns investment across the value chain and provides a framework to promptly deliver a fully financed project.
The Shareholders’ Agreement and FID are subject to, amongst other things:
- agreement of final terms and execution of documentation for the project debt financing
- approval by the shareholders of Ophir Energy plc
- approval by the government of Equatorial Guinea
1 Except in a higher price environment.
A six person Board of Directors will be formed comprising four directors nominated by OneLNG and two directors nominated by Ophir. OneLNG will nominate the Chief Executive and one of Ophir’s nominated directors, Bill Higgs, will serve as inaugural Chairman for a two year period. A co-located team, drawn from experienced personnel from the parent companies, will be formed.
The project is structured such that a tariff will be charged to the upstream for use of the vessel and the liquefaction facilities. Consequently, revenue will flow into the PSC which will be divided between the government and the JOC as per the existing terms. The midstream tariff, once debt service has been deducted, will be distributed to the JOC partners.
The Fortuna Project
The project has been structured simply and in bringing together several industry-leading partners and contractors, it leverages off company skillsets. The JOC formed with Ophir and OneLNG will facilitate the financing, construction, development and operation of the integrated Fortuna project and, from FID will own Ophir’s share of the Block R licence and the Gandria FLNG vessel. The JOC is currently looking at the monetisation of 2.6 Tcf of the discovered resource with one vessel, however, there is still the intention to look at two vessels and the development plan considers this.
The upstream development will consist of 17 development wells over four phases. In the first phase, up to first gas in 2019, four wells will be drilled. These wells will be drilled pre-first gas and a minimum of two wells are required to achieve the 2.2 mmtpa plateau. These production wells in the Fortuna and Viscata reservoirs will be simple well competitions and tie-backs. The gas will be produced from these wells via gathering flowlines, manifolds and risers to an external turret of the FLNG facility.
In Phase 2 five wells will be drilled to elevate the plateau to 4.4 mmtpa and will utilise a second FLNG vessel. Phase 3 requires a further three wells and Phase 4 a further five wells.
- Five wells to be drilled in Phase 2 to elevate plateau to 4.4mmtpa utilising a second FLNG vessel
- Eight further wells across Phases 3 and 4
In July 2015 Ophir awarded Upstream FEED contracts for the project to two contractor consortia. This is a competitive process with the scope of work including subsea development design that will enable the two competing FEED consortia to submit their EPCIC (Engineer, Procure, Construct, Install & Commission) tenders at the end of FEED, from which one will be selected for FID.
An existing vessel, the Gandria, will be converted and this will be owned and operated through the JOC. When the Gandria comes on stream in EG in 2020 it will most likely be the fourth or fifth FLNG vessel to go into production. Topsides, processing and liquefaction facilities will be designed and engineered by Black and Veatch; technology chosen for its long-established record of reliable performance in global operations. The Gandria will store the gas, in liquefied form, for other specialist tankers to transport away.