Australian player reveals cost escalation for crucial oilfield development offshore Africa - Upstream Online

Australian player reveals cost escalation for crucial oilfield development offshore Africa | Upstream Online

Australia’s Woodside Energy has revealed that project costs for the first development phase of its Sangomar oilfield offshore Senegal have increased to as much as US$5.2 billion, with first oil now delayed to as late as mid-2024.

Woodside on Tuesday said that it “performed a cost and schedule review of the Sangomar Field Development Phase 1 following the identification of remedial work required on the floating production storage and offloading facility”, which highlighted higher project costs.

The total project cost is now expected to be between $4.9 billion and $5.2 billion, an increase of 7% to 13% from the previous cost estimate of $4.6 billion.

Woodside chief executive Meg O’Neill said the remedial work was unexpected and the project team’s highest priority remains the safe completion of all activities.

“We have taken the prudent decision to have the remedial work conducted while the FPSO remains at the shipyard in Singapore,” she said.

The FPSO in late 2022 was delivered to Keppel Offshore & Marine, subsequently acquired by Seatrium, and is still in a yard in the city state.

O’Neill added that the company’s approach [to having the issues with the FPSO sorted]ensures that it can “achieve production start-up in line with the adjusted schedule and ramp up operations as planned".

Japan's Modec in 2020 won the contract to supply the FPSO for the Sangomar Phase 1 development.

The hull and marine works, external turret and topsides module installation and conversion work on the floater were performed by China’s Cosco Shipping Heavy Industries (Cosco). The topsides modules were built by Cosco and compatriot Bomesc Engineering Company (Bomesc) while China’s Penglai Jutal Offshore Engineering (PJOE) built the external turret mooring system.

O'Neill late last year had hailed the achievements of Modec, Cosco, Bomesc and PJOE in completing the fabrication and conversion works.

“The Chinese yards achieved excellent safety performance throughout this phase of construction, logging more than 16 million hours of complex construction work without a lost-time injury event.

“The construction teams also successfully navigated the challenges posed by pandemic-related travel and logistical restrictions throughout 2021 and 2022, ensuring the FPSO remained on schedule for start-up at the Sangomar field in late 2023,” she said in November 2022.

However, Upstream earlier that month had reported that the floater was being moved from China to Singapore for the topsides integration work, apparently due to concerns over China’s coronavirus lockdown measures and how they might have an impact on the completion of the project.

The Leopold Sedar Senghor FPSO was then expected to have been delivered from Keppel Offshore & Marine's yard in the first quarter of 2023.

Upstream has approached Modec and Seatrium for possible comment regarding the remedial work required on the FPSO.

Making progress

Woodside noted that the development drilling programme is continuing at Sangomar, “with 12 of 23 wells drilled and completed".

The drillship Ocean BlackHawk successfully completed its workscope in July and the remaining drilling activity will be completed by the Ocean BlackRhino.

“At 30 June 2023, the overall project was 88% complete. The subsea installation campaign was 76% complete, with the subsea workscope 95% complete,” the company said.

O'Neill on Tuesday claimed that the delay to Sangomar's project schedule would have no impact on Woodside’s production guidance for 2023. First oil from this offshore Africa project had been scheduled for late this year.

The Leopold Sedar Senghor FPSO, a converted very large crude oil carrier, will have the capacity to produce 100,000 barrels per day of oil.

Woodside has an 82% operated participating interest in the Sangomar project with Petrosen holding the remaining 18%.

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