Oil field project off Thailand comes back online

Canada-based oil and gas company Valeura Energy has restarted production from an oil field project in the Gulf of Thailand and increased its interest in the licence containing this field. Additionally, the firm opted to divest its stake in another licence.

MOPU Ingenium; Source: Valeura Energy

Back in November 2022, Valeura entered into a letter of award (LOA) with PT Buana Lingas Lautan (Buana) for the charter of the MT Vula tanker, which would be used as an FSO vessel for the production from the Wassana oil field, where production was suspended in May 2020 by the previous operator.

Following a sale and purchase agreement in April 2022, Valeura completed the acquisition of the entire share capital of KrisEnergy International in June. As a result, the company holds an operated interest in two shallow water offshore licences in the Gulf of Thailand – Licence G10/48, containing the Wassana oil field, and Licence G6/48 containing the Rossukon oil field.

In an update on Friday, 28 April 2028, Valeura announced the restart of oil production from the Wassana field and revealed changes to its working interest in the offshore licences G6/48 and G10/48 in the Gulf of Thailand. Regarding the restart of production at the Wassana field, the company explained that crude oil was introduced into the field’s processing facilities for the first time in nearly three years. 

With the activation of additional wells shortly thereafter, production rates have begun ramping up. As Valeura’s partner in Licence G10/48, Palang Sophon Limited (PSL), has opted to discontinue its participation in the licence, the two players agreed that PSL would transfer its 11 per cent working interest to Valeura. 

Furthermore, Valeura intends to proceed with further Wassana oil field operations on a 100 per cent working interest basis, including its planned infill drilling campaign which is scheduled to begin in 3Q 2023. As a result, Valeura has agreed to discharge PSL of outstanding liabilities owed in connection with joint operations on the licence as well as any future liabilities associated with its past involvement in the licence.

As a reminder, the Canadian player completed the underwater survey work on the Wassana field’s Ingenium mobile offshore production unit (MOPU) and the engineering reports were submitted to support the re-certification of the facility for continued use during the third quarter of 2022. The re-certification of the MOPU Ingenium- amounting to a formal life extension of the facility – was expected once “minor upgrades” were completed in November 2022.

Sean Guest, President and CEO of Valeura, commented: “I am delighted to announce the restart of production from the Wassana oil field and grateful to our team who oversaw this safe reactivation. This achievement fulfils the vision we set when we completed our acquisition of these assets in mid-2022, and our success is energised by our increased working interest in the project. 

“Raising our sights, we are now looking with excitement toward Wassana’s upcoming growth phase as we prepare for infill drilling to start in 3Q 2023, with the target of increasing field output toward approximately 5,000 bbls/d (on a 100 per cent Valeura interest basis).”

On the other hand, the company opted to divest its working interest in Licence G6/48 to its partner Northern Gulf Petroleum (NGP) for a contingent cash consideration of $5 million, payable at first oil from the Rossukon oil field, and a further 4.65 per cent overriding royalty associated with the firm’s 43 per cent working interest (2 per cent of gross production) from the field thereafter. This decision was reached following consideration of the project’s tight schedule requirements and an estimated capital requirement of approximately $100 million (gross).

“Separately, I am pleased to have arrived at an efficient way to realise the potential value from Licence G6/48. Valeura will bear no risk, and no obligation for any capital costs in relation to the Rossukon oil field development and the contingent payment due to us upon first oil will effectively offset the contingent payment owed by us to the receiver upon first oil (in connection with our acquisition of the licence interest in 2022). At the same time, the arrangement provides us a long-term potential revenue stream by way of an overriding royalty,” added Guest.

Meanwhile, Valeura Energy has been working on boosting its Gulf of Thailand portfolio. To this end, the company wrapped up in March 2023 the acquisition of upstream oil-producing assets from Mubadala Petroleum’s subsidiary, Busrakham Oil and Gas.

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As a result, the company is now the holder of a 100 per cent operated interest in licence B5/27, containing the Jasmine and Ban Yen oil fields; a 90 per cent operated working interest in licence G11/48, containing the Nong Yao oil field; and a 70 per cent operated working interest in licence G1/48, containing the Manora oil field.