BP charters Foinaven FPSO for up to ten years

Teekay, which has recently decided to change its name to Altera Infrastructure, has entered into a new bareboat charter contract with the Foinaven operator, a subsidiary of BP, for the Petrojarl Foinaven FPSO unit for up to approximately ten years.

Petrojarl Foinaven FPSO; Source: Teekay

Under the terms of the contract, Teekay is expected to receive an upfront payment of approximately $67 million in cash, a nominal per day rate over the life of the contract, and a lump sum payment at the end of the contract period, which is expected to cover the costs of recycling the FPSO unit in accordance with the EU Ship Recycling Regulations, Teekay said in a statement on Friday.

As part of the transaction, Teekay Offshore, now known as Altera Infrastructure, has entered into agreements with the Foinaven operator directly to provide the operations and shuttle tanker services for the Foinaven FPSO.

The BP-operated Foinaven field is located 190 kilometres west of Shetland in water depths of between 350 and 520 meters. The field was discovered in 1990 and sanctioned for development in 1994. It was the first deepwater development on the UKCS and the first west of Shetland.

First oil from the field was in November 1997. The pioneering fast-track development was based on a network of subsea wells linked via a subsea network of pipelines, control umbilicals and risers to the Petrojarl Foinaven FPSO.

“We are pleased to announce this new contract for the Foinaven FPSO, which allows our customer to continue to maximize the value of the Foinaven field whilst eliminating Teekay’s operational exposure to the FPSO unit,” commented Kenneth Hvid, Teekay’s President and CEO.

“The new contract further reduces our exposure to the offshore business, which is a strategic priority, improves our profitability, and allows us to further delever and strengthen our balance sheet.”

BP North Sea Regional President, Ariel Flores, said, “This new arrangement will enable BP and its joint venture partner RockRose Energy to introduce an innovative contractual framework for the FPSO’s operating services and shuttle tanker provision, giving BP greater influence over the strategic direction of operations, while allowing us to build on our existing strong relationship with Altera Infrastructure. It will also help ensure safe, reliable and efficient operations out to at least 2025 and give us space to set the Foinaven area up for future success.”

Altera Infrastructure FPSO President, Chris Brett, commented, “We are proud of our 24 years of continuous operations on the Foinaven field in the harsh West of Shetlands environment. This innovative new contractual model allows us to keep providing our unique competency to BP and their partners as we work together to extend the Foinaven field safely into the future.”