Karoon unveils multimillion-dollar investment into FPSO revitalization campaign

August 28, 2025, by Melisa Cavcic

Karoon Energy, Australia’s oil and gas company, has revealed its investment plans for a floating production, storage, and offloading (FPSO) revitalization campaign and a life extension project at a field off the coast of Brazil.

FPSO Cidade de Itajai is operating on the Baúna field; Source: Karoon

Months after buying the FPSO Cidade de Itajaí, which is deployed at its Baúna project in BM-S-40, Karoon Energy has now disclosed the launch of its Baúna revitalization and life extension projects, with forecast expenditure of approximately $55-65 million in 2026 and $80-90 million over the period 2030-2034. The company has reassessed the reserves and contingent resources for the project as of June 30, 2025.

Dr Julian Fowles, Karoon’s CEO and Managing Director, commented: “One of the key drivers underpinning the 1H25 Baúna FPSO acquisition was the potential to reduce future operating costs, which would allow us to access some or all of the existing contingent resources.

“A comprehensive analysis has now been completed, which has confirmed that, with our expected new cost structure and implementation of life extension plans, the economic life of the Baúna project can be extended by approximately seven years, from 2032 to 2039, when the production concession expires. In addition, over the past 18 months, the Baúna decline rate has been lower than our expectations, indicating a higher ultimate recovery from the project.”

The studies included an assessment of updated reservoir performance, modelling, and activities outlook; removal of Altera&Ocyan (A&O) FPSO charter costs, leading to a reduction in minimum economic production rates; an updated assessment of long-term operating costs; updated assessment of field abandonment costs, and the production concession expiry date of February 2039.

As a result, 2P reserves got revised upward by 17.6 million barrels of oil. After production of 3.9 million barrels of oil for the first half of 2025, 2P reserves at the end of June 2025 were 52.7 million barrels of oil, compared to 39 million barrels of oil at the end of December 2024.

On the other hand, 2C contingent resources were reduced from 11.2 million barrels of oil to 3 million barrels of oil over the same period based on the potential to produce until the assessed end of the facility operating life in 2040. Karoon claims that 2P recoverable volumes have increased by 120% since the acquisition of the asset in November 2020.

Karoon expects to invest $55-65 million in its FPSO revitalization campaign in 2026 and approximately $80 – 90 million for life extension activities between 2030 and 2034. This life extension CAPEX is expected to include two flotel campaigns and associated equipment upgrades.

Given the inclusion of the FPSO, as well as changes in scope, activity durations, and vessel rates, abandonment costs have increased from $174.9 million in 2032 to $260 million in 2039. The Baúna project comprises the Baúna, Piracaba, and Patola fields in concession BM-S-40 offshore Brazil.

The FPSO Cidade de Itajaí, which is capable of operating in water depths of up to 1,000 meters, was constructed at Singapore’s Jurong shipyard in 1995 and converted in 2012. This unit, which began operating in Brazil in February 2013, can produce 80,000 barrels of oil per day and compress 2 million cubic meters of gas a day.