Karoon teams up with Shell to trade and ship Baúna oil

Karoon Energy has signed a marketing agreement with Shell West, a member of the Royal Dutch Shell group, to trade and ship crude oil production from the Baúna field located offshore Brazil.

FPSO Cidade de Itajaí
FPSO Cidade de Itajaí; Source: Karoon

The Baúna field, located in the Santos Basin off the coast of the state of São Paulo, started its operations in February 2013 and has a current output of about 20,000 barrels of oil per day through the FPSO Cidade de Itajaí.

The marketing agreement is for a term of up to five years and provides Karoon with access to Shell West’s global marketing and shipping platform, according to Karoon’s statement on Monday, October 21.

As part of the marketing agreement negotiation, Karoon and Shell West have now agreed terms, and Shell West has obtained internal credit approval, for a $50 million term loan facility at Karoon’s Australian business level. It is intended that this loan facility will be used as a reserve working capital facility.

Karoon will now seek to finalize the loan facility documents under usual commercial terms.

Karoon Managing Director, Robert Hosking, said: “This agreement provides for value add through access to end buyers that are currently buying similar grade of oil out of Brazil and allows Karoon to coload on larger vessels, reducing transport costs. Overall Karoon expects to retain a higher net back pricing for FOB Baúna production.”

These agreements are subject to financial completion of the Baúna transaction and entry into the loan facility is subject to completion of due diligence and negotiation and finalization of definitive documentation.

It is worth reminding that Karoon executed a binding sale and purchase agreement with Petrobras to acquire a 100% operating interest in the Baúna field (Concession BM-S-40) located in the Santos Basin for a headline consideration of $665 million in July 2019. The transaction is expected to be completed in the first half of 2020.

The Baúna field consists of two producing oil reservoirs, Baúna and Piracaba, which are both tied back to the leased FPSO Cidade de Itajai, and the existing undeveloped Patola discovery.

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