Schlumberger and Golar: Equatorial Guinea’s Fortuna Project Back On!

Subsidiaries of oil majors Schlumberger and Golar LNG signed an agreement to pursue a joint venture for the Fortuna project, which will be executed in Equatorial Guinea’s offshore Block R, according to World Oil.

Golar’s OneLNG and Schlumberger’s Ophir will each take a 66.2 percent and 33.8 percent share, respectively, of the joint company JOC, which will help to ease the process of financing and developing the two firms’ portion of the project.

First-gas from the site is expected by the beginning of 2020, with 2.2-2.5 million tons of production per year for 15-20 years.

The deal’s current structure dictates that JOC will own Ophir’s Block R license as well as the Gandria floating liquefied natural gas vessel, but before any cash exchanges hands, both firms must make a final decision on initial financial contributions to the project.

Schlumberger had previously agreed to be part of the deal, but withdrew when the venture’s financials proved to be unwieldy.

“Formation of the Fortuna JOC provides the framework for FID and clear line of sight to first gas,” said Nick Cooper, CEO of Ophir, who expects the JOC to spend around $2 billion before tasting the first profits from the extracted gas, with $1.2 billion from loans.

“This progress is due to the innovative partnering between OneLNG and Ophir, the quality of the resource base, the excellent project economics and support from the government of Equatorial Guinea.”

Cooper added that his firm would not spend more than $150 million in cash to jumpstart the project’s operations.

Earlier this year, the International Monetary Fund said it expects Equatorial Guinea’s economy to shrink by a massive 10 percent in 2016 - after having already contracted by 7.4 percent last year - as low oil prices batter the economy’s dominant oil and gas sector.

The central African country is often used as a poster child for the “resource curse.”

By Zainab Calcuttawala for Oilprice.com

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