Another five years awarded to Al-Shaheen FSO tandem

A joint venture between Euronav NV and International Seaways has signed a five-year deal for the service of the FSO Africa and FSO Asia on the Al-Shaheen field, off Qatar, with the North Oil Company (NOC). 

NOC, the future operator of the Al-Shaheen oil field, is a JV company, which is 70% owned by Qatar Petroleum and 30% owned by French oil major Total. NOC began negotiating the contract for the two FSOs in December 2016.

The custom-made FSO units with 3 million barrels of capacity have been serving the Al-Shaheen field without interruption since 2010. The new contracts will have a duration of five years starting at the expiry of the existing contracts with Maersk Oil Qatar in the third quarter of 2017.

In mid-2016, it was decided that Maersk Oil would be replaced as the operator of the Al-Shaheen offshore oil field by Total starting July this year. Maersk’s exit from Al-Shaheen comes after 25 years of operatorship and 22 years of production from the field.

According to statements by Euronav and International Seaways from Wednesday, the new contracts are expected to generate $360 million of EBITDA (earnings before interest, taxes, depreciation and amortization). Based on the fact that it is a 50-50 JV, each company will be entitled to $180 million.

The FSO Africa and FSO Asia floating storage platforms are both high specification and long duration assets with a potential trading life to 2032.

Euronav added that the joint venture with International Seaways would be debt free from July 2017 providing further options to create value.

Paddy Rodgers, CEO of Euronav, said: “We are pleased as these contracts provide Euronav with an additional degree of high quality earnings visibility. Combined with our underlying time charter portfolio, this provides Euronav with a solid base of fixed income.”