Woodside mulls cost cuts for Sangomar offshore development
Australian energy giant Woodside is exploring how the costs for its Sangomar project, located offshore Senegal, can be reduced and expenditure delayed due to the current coronavirus pandemic and the sudden fall of the oil price.
FAR, one of Woodside’s partners in the project, said in an update on Wednesday that the joint venture partners are working to explore and evaluate all options to preserve and enhance the value of this world-class development in the current oil price and economic environment.
According to FAR, the Senegal government has now closed its borders.
“Further details will be announced upon completion of the review, however, it will include how the costs can be reduced, expenditure delayed or both and any impact on the timeline to first oil,” FAR said in the statement.
FAR also said that its discussions with financiers are materially compromised in the present market conditions. Disruptions caused by the COVID-19 pandemic and the crash in the oil price are presenting challenges to its debt process.
FAR Managing Director, Cath Norman, said, “The Senegal JV is working to better understand the impact on the Sangomar development of the COVID-19 virus and we anticipate releasing an update in the near future.”
In January 2020, Woodside executed the purchase contract for the floating production storage and offloading (FPSO) facility and issued full notices to proceed for the drilling and subsea construction and installation contracts for the Sangomar Field Development Phase 1.
Phase 1 of the development will target an estimated 231 MMbbl of oil resources (2P gross, 60 MMbbl (2P) reserves Woodside net economic interest) from the lower, less complex reservoirs, and an initial pilot phase in the upper reservoirs
The key contractors were awarded to MODEC, Inc. for the purchase of an FPSO with an oil processing capacity of 100,000 bbl/day; Subsea Integration Alliance (a non-incorporated alliance between Subsea 7 and OneSubsea) for the construction and installation of the integrated subsea production systems and subsea umbilicals, risers and flowlines; and Diamond Offshore for two well-based contracts for the drill rigs Ocean BlackRhino and Ocean BlackHawk.