BW Offshore's Barossa FPSO Nears Completion Amid Inflation Challenges
Posted 28/08/2023 11:03
Norway's prominent FPSO operator, BW Offshore, continues to advance its construction of a floating production storage and offloading (FPSO) vessel earmarked for the Barossa gas field offshore Australia. BW Offshore secured the FPSO contract for the Barossa project in March 2021 and subsequently initiated a partnership involving ICMK Offshore Investment and Macquarie Bank. This collaboration, aimed at enhancing the project's progress, received regulatory approval shortly after its announcement.
The FPSO's construction, commissioning, and installation have been impacted by persistent cost inflation, thereby consuming the engineering, procurement, construction, and installation (EPCI) buffers. Nonetheless, the overall economics of the lease and operate contract for the FPSO remain unaffected. As of July 2023, the project is approximately 73% complete and maintains an exemplary health and safety (HSE) record, with over 17.5 million work hours executed without lost time injury.
Marco Beenen, CEO of BW Offshore, affirmed the company's commitment to the project's advancement, stating: "We have a firm focus on progressing the Barossa FPSO per plan, delivering high operational uptime on our core assets while completing the divestment of the non-core assets."
The Barossa field, situated 300 kilometers offshore Darwin, is operated by Santos on behalf of Upstream Joint Venture partners. The FPSO's services contract encompasses an initial production period of 15 years, along with options for a 10-year production extension, culminating in a contract valued at $4.6 billion.
Designed for optimal efficiency, the large FPSO boasts a processing capacity of up to 800 million standard cubic feet per day (MMSCFD) of gas and a design capacity of 11,000 barrels per day of stabilised condensate. Initial gas production is anticipated in the first half of 2025.
Despite inflationary challenges, the FPSO market retains its robustness due to elevated energy prices and industry demand for efficient production solutions. However, new project awards are influenced by inflation and the preferences of lenders and co-investors.
In addition to the Barossa FPSO, BW Offshore anticipates a cost impact related to the decommissioning of FPSO Petróleo Nautipa, amounting to approximately $10 million per quarter in the latter part of 2023. These strategic adjustments reflect the evolution of the company's FPSO portfolio.
BW Offshore's commitment to driving sustainable energy solutions and efficiently navigating market dynamics positions it as a frontrunner in the industry's pursuit of a greener and prosperous future.