Ophir Energy has signed a heads of agreements for LNG offtake from the Fortuna FLNG project off Equatorial Guinea.
The deal is with six counterparties, all of whom are established LNG buyers in European and Asian markets.
Management said the estimate of the gross capital expenditure required to first gas has been revised downwards from $800 million to $600 million based on recent input from the ongoing upstream FEED work.
Ophir is selling 2.2 MTPA of LNG offtake, however the total demand requested under the heads of agreements has seen the offtake sold several times over.
As well as pricing structure, Ophir has secured additional elements to its LNG offtake including the offer to pre-pay for LNG volumes in substantial quantities over the early years of the contract. The funds received from pre-payments could cover 30%-50% of Ophir’s total net cost to first gas and could therefore be a major contributor towards funding of the project.
The current management estimate for gross cost to first gas has reduced 25% f to $600 million ($480 million net to Ophir).
The company has also contracted Fugro to perform geotechnical, environmental and metocean surveys for the Fortuna project. The Fugro Searcher, Fugro Scout, and Fugro Frontier vessels have been deployed for this work, which is scheduled for completion in January 2016.
Chief executive Nick Cooper, said: “The Fortuna FLNG project continues to move forward on schedule with the now formal signing of all the heads of agreements for gas offtake with a core group of LNG buyers.
“Each offtaker’s proposal offers something different, thereby providing Ophir with a range of pricing formulae and differing commodity risk profiles which will be helpful when we narrow down the short list in quarter one 2016.
“We are also pleased to report that the estimated cost to first gas has been reduced by a further 25% during FEED. This cost reduction, plus the offered LNG pre-payment mechanisms materially reduce the amount required to fund Ophir’s portion of the project ahead of the Final Investment Decision in mid-2016.”