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BP hits force majeure brakes at Tortue LNG

Downtown Dakar
Downtown Dakar

BP has declared force majeure on its Tortue LNG project with Golar LNG, saying it would not be ready to receive the floating unit in 2022 as a result of the coronavirus pandemic.

BP Mauritania issued the claim to Gimi MS, a subsidiary of Golar LNG. This follows the lease and operate agreement from February 2019.

According to Golar LNG, BP has said that the outbreak of coronavirus has made it unable to receive the floating LNG (FLNG) vessel as planned in two years’ time. The super-major has estimated the delay will be around one year and that it was not currently possible to change this delay.

Golar LNG’s statement expressed some scepticism at the BP claim, saying it was seeking clarification on how force majeure at the end of March 2020 would impact the planned schedule by a year.

The two sides are holding an active dialogue, the LNG specialist said, on the delay’s duration. Golar LNG is reserving its various rights under the agreement – making it sound like it will be a long day for the company’s lawyers.

As a result of the force majeure declaration, Golar LNG said it had begun talks with Keppel Shipyard, which is handling the FLNG work, on rescheduling activities. The aim is to “reduce and reprofile its capital spending commitments for 2020 and 2021”.

BP Gas Marketing had signed up as the LNG offtaker from the project, with 2.45 million tonnes per year contracted for 20 years.

The super-major has also slowed surveying work around Senegal and Mauritania, similarly pleading the impact of coronavirus.

According to Golar LNG’s most recent results, $434mn has been invested in the Gimi vessel. It has a $700mn debt facility, while the total contract price for Gimi is $947mn. The Gimi MS company is 70% owned by Golar LNG and 30% by Keppel.

Kosmos Energy is partnered with BP at the Tortue LNG project. The US company was initially carried by BP on the work but expected it would need to provide around $250mn this year, or $600mn to the beginning of production.

Kosmos said in mid-March that it was working with BP to extend the carry until the end of the year.

BP’s declaration of force majeure followed closely on ExxonMobil’s announcement that it would not be reaching a final investment decision (FID) on its Rovuma LNG plan, in Mozambique, this year.

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