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Four go after Greater Pecan

A quartet of contractors are set to submit commercial bids to US independent Hess early in the new year as they battle to supply a major floating production, storage and offloading vessel for the challenging $4 billion Greater Pecan project off Ghana.

Industry sources said Hess informed Malaysia's Bumi Armada, Tokyo-headquartered Modec, SBM Offshore in the Netherlands and Kuala Lumpur-based Yinson that commercial offers are required in January.

“They’ve asked for commercial submission in January now,” said one project watcher, a submission date confirmed by another industry source.

Up for grabs will be a contract to provide a VLCC-sized FPSO, spread-moored in 2600 metres of water in the Deepwater Tano-Cape Three Points (DT-CTP) block and able to handle about 110,000 barrels per day of oil.

It is understood that Bumi Armada, Modec, SBM and Yinson took part in a competitive front-end engineering and design contest this year, with each submitting their technical proposals to Hess in early July.

Two of the floater rivals have experience in Ghana that could potentially place them at an advantage — Modec supplied the FPSOs for Tullow Oil's producing Jubilee and Tweneboa, Enyenra and Ntomme fields, while Yinson supplied the FPSO for Eni's Sankofa-Gye Nyame field which came on stream in July.

However, both Bumi Armada and SBM will be keen to boost their order books after enduring tough times.

After this summer's submission of technical bids, the FPSO players' next step was to submit prices but that process was delayed until a major project road block — the maritime boundary dispute between Ghana and the Ivory Coast — was resolved.

“Floater contractors were supposed to hold off submitting prices until a decision on the boundary dispute was taken,” said a source.

Last month, the International Tribunal for the Law of the Sea found in favour of the Accra-based government, which appears to mean that all seven of Hess’ discoveries officially belong to Ghana.

The tribunal’s finding was a major fillip for Hess because the Ivory Coast’s boundary claim ran right through the centre of the DT-CPT block, including all or part of the Pecan, Pecan North, Almond and Cob discoveries.

Three other finds in the acreage — Beech, Hickory North and Paradise — have always been in uncontested Ghanaian waters.

With the maritime boundary issue resolved, some sources had expected Hess to call for commercial offers either this month or next month, so the delay — for reasons that are unclear — until January came as something of a surprise.

However, Hess' decision underscores a widespread view in the market that Greater Pecan is not yet a priority project for the New York-listed company, which is focused on exploiting five prolific oil discoveries off Guyana, including Liza, where it partners operator ExxonMobil.

Commenting on where the Houston-based independent’s spending priorities lie, one informed source said: “Hess is going to put money where its best bet is, and right now that is Liza.”

There are even suggestions from some that Hess might exit Ghana entirely if the right offer comes along.

A final investment decision on Greater Pecan is now only likely towards the end of 2018, targeting first oil in 2021. The FPSO is expected to develop the Pecan, Pecan North and Almond discoveries after Cob was declared non-commercial last year by Hess.

As for two of the other discoveries in the block, Hickory North and Paradise, Hess has informed Ghana’s Petroleum Commission that it wants to invoke Article 14.19a of the DT-CTP contract to negotiate a new petroleum agreement due to the non-associated gas resources they hold.

Beech will also be tapped at a later date because it extends into a neighbouring block operated by Accra-based Springfield E&P, meaning a unitisation deal will have to be agreed.

An industry source said Springfield's West Cape Three Points Block 2 asset hosts about 40% of Beech.

There is also talk in the market that Hess has opened up a data room to reduce its 40% stake in DW-CTP.

One source speculated ExxonMobil could be interested, having had a deal to buy Kosmos Energy’s stake in the Jubilee field rebuffed some years ago by the government.

The Greater Pecan FPSO will be one of the world’s deepest water projects, and is set to host an initial dozen or so wells fed to the FPSO via steel catenary risers.

Oil would be offloaded into shuttle tankers, while gas would be exported to landfall in Ghana.

According to GNPC, the project’s resources stand at 370 million barrels of oil and 670 billion cubic feet of gas.

Until recently, New York-listed Hess held a 50% stake in DT-CTP and was partnered by Russia’s Lukoil on 40% and state-owned Ghana National petroleum Corporation on 10%.

However, GNPC recently increased its holding to 20% with Hess’ stake falling to 40% while Lukoil’s share dropped slightly to 38% with a local energy trader, FuelTrade, picking up 2%.

 

Source: Upstreamonline.com