SNE could stall on Far arbitrationOperator reveals ongoing arbitration is affecting project financing for partners
Josh Lewis15 Aug 2019 06:08 GMT Updated 15 Aug 2019 12:42 GMT
Woodside Petroleum chief executive Peter Coleman says ongoing arbitration by joint venture partner Far Ltd is having an effect on a final investment decision being reached on the SNE oil development off Senegal.
Coleman revealed the main hold-up with the project currently is the ability for Woodside’s partners, including state-run oil company Petrosen, to obtain project financing.
He added that Woodside had been assisting the partners but had received feedback from financiers that Far’s ongoing arbitration against former SNE stakeholder ConocoPhillips was creating uncertainty.
Halliburton bags work on Woodside's SNEFar alleges that ConocoPhillips sold its 35% interest in the Rufisque-Sangomar-Sangomar Deep (RSSD) block to Woodside in 2016 without due regard for its pre-emption rights.
While the case has been heard by the International Chamber of Commerce, a ruling is not expected until towards the end of this year, which has the potential to throw the SNE development into doubt.
“To be honest with you … it’s not clear to me how Far is going to resolve this at this point. The arbitration has been heard but the ruling itself is unlikely to come down before the end of the year, if it does it will be very late in the year,” Coleman told analysts in a call on Thursday.
“We have a PSC that expires in early December so any ruling that comes down after the PSC expires is kind of a useless ruling anyway so … I’d flip it back into their court (Far) as to how they are actually going to solve the problem that they’ve caused here for the joint venture.”
Senegal wildcat disappoints for TotalThe joint venture received an extension to the PSC covering the RSSD block in February this year, however Coleman later told media in a separate call on Thursday that an extension beyond the current 4 December deadline could only be granted by Senegal President Macky Sall.“At this point, anything beyond the 4 December will really be up to the President, at this point we haven’t approached him at all. I don’t know what case we will take to the President to be quite honest with you … to request an extension,” Coleman said.“I think you are going to find over the next couple of months we will need to make that decision (of applying for an extension) as a joint venture but the key there is that we are going to have to show progress towards FID so the key is, in my view, if an extension is expected because one partner has taken arbitration out for commercial gain and you are asking for an extension for that to be completed, I just very much doubt [that would be accepted].”ConocoPhillips and Far arbitration to begin in Senegal acreage disputeWith the exception of the arbitration, Coleman told analysts that the progression of the rest of the project had been going well with the key contracts already awarded, subject to the project reaching a final investment decision.
“We’ve got the all-star team in our view of the contractors to execute this project and execute it really well,” he said.
“So, we are really pleased with what we’ve been able to do with our contracting and development plans and … we’ve just re-submitted the field development evaluation plan or exploitation plan. So all of the things that we control are going very well.”
Woodside
this month awarded US company Haliburton nine conditional contracts for drilling and completion services at SNE.
An alliance of Subsea 7 and Schlumberger's OneSubsea has also been awarded the contract for SNE's entire subsea system.
Woodside takes Diamond drillships off SenegalFront-end engineering and design studies are ongoing on both the subsea systems and the floating production storage and offloading vessel which will be supplied by Japanese company Modec.
The first phase of development will target an estimated 230 million barrels of oil from 11 producing wells, 10 water injectors and two gas injectors, with first oil being targeted for 2022.
Output would be handled by a stand-alone FPSO with a capacity of about 100,000 barrels of oil per day.
Woodside operates the SNE field with a 35% stake and is partnered by UK independent Cairn Energy on 40%, Far on 15% and state-owned Petrosen on 10%.
(20min delay)