Ithaca, Petrofac reach FPF-1 deal
Ithaca Energy, the operator of the Greater Stella Area in the UK North Sea, has reached an agreement with Petrofac in respect of the “FPF -1” floating production facility contract awarded in 2011.
According to Ithaca, the agreement will provide enhanced incentivisation for the timely delivery of the production platform, which remains on track for sail-away from the Remontowa Shipyard in Poland at the end of the first quarter of 2016.
The agreement also provides important contract cost clarity, thereby ensuring efficient execution of the remaining FPF-1 modification works, Ithaca said.
According to a statement by Ithaca, the agreement stipulates that all costs of modifying the FPF-1 above the contract cost cap will continue to be fully paid by Petrofac as incurred.
Ithaca will pay Petrofac $13.7 million in respect of final payment on variations to the contract, with payment deferred until three and a half years after first production from the Stella field.
Also, a further payment to Petrofac of up to $34 million will be made by Ithaca dependent on the timing of sail-away of the 82 m long, 75 m wide and some 30 meters high FPF-1 platform.
Ithaca has said that the maximum payment can be achieved for delivering sail-away of the vessel from the shipyard prior to the end of March 2016, with this incentive payment eroding on a daily basis to zero by 31 July 2016. This payment will also be deferred until three and a half years after first production from the Stella field.
Commissioning operations have started on the FPF-1. Sail-away of the vessel remains on track for the end of the first quarter of 2016, with first production from the Stella field anticipated at the end of the second quarter.
Les Thomas, Chief Executive Officer, said: “Delivery of first hydrocarbons from the Greater Stella Area is the next key operational priority of the Company. This agreement introduces a significant additional incentive for Petrofac to provide timely delivery of the FPF-1, without affecting the liquidity position of the Company.”
The Greater Stella Area production hub is underpinned by the development of the Stella and Harrier fields. The plan for the joint development of the fields was approved by the UK Department of Energy and Climate Change (DECC) in April 2012. The development is centred on the drilling of subsea wells tied back to the “FPF-1” floating production unit, with the onward transportation of processed hydrocarbons to nearby existing oil and gas export infrastructure. It is planned for five wells to be drilled on the Stella field and two on the Harrier field.