Aker Energy Postpones Decision On Ghana Floater Amid Signs Of Strategy Shift On Subsea Contract

A decision on which contractor will land a major order to supply a floating production, storage and offloading vessel for Aker Energy’s 330-million-barrel Greater Pecan project off Ghana has been delayed by up to four months.

Industry sources said the Norwegian operator had been set to decide by late June which out of Netherlands-based SBM Offshore and Malaysia’s Yinson would land the FPSO deal, but Upstream understands a choice will now only be made by October.

One project observer said the delay reflects how Aker is “struggling with the complexities of Ghana”.

The source added that that Greater Pecan’s schedule “just keeps on slipping”.
Another source said the project is “definitely going more slowly than expected”, highlighting, for example, how Aker had to re-submit a revised development plan last month to the government amid concerns, among other things, about cost.

Upstream was told that two of Aker’s three partners in Greater Pecan — Russia’s Lukoil and state-owned Ghana National Petroleum Corporation (GNPC) — balked at the original project scope’s price tag.

While the deep-water development was never going to be cheap, one project observer said it was “too complex and too expensive” so the partners asked Aker “to go away and simplify it”.

It is understood that Aker wants SBM and Yinson to reduce the price of their commercial offers covering the FPSO lease-and-operate contract which will also have a purchase option.

But a source remarked that with the FPSO market “heating up very quickly and capacity disappearing” it is unclear how far prices can be reduced, particularly in the context of other issues that SBM and Yinson are being requested to address.

“To ask (FPSO) contractors to simultaneously reduce prices, increase local content and increase Norwegian content is (a challenge),” said one well-placed contact.

There has been talk of upgrading Tema Shipyard possibly with the help of Kvaerner and Dubai Dry Docks.

The FPSO will be designed to handle 110,000 barrels per day of oil, 110 million cubic feet per day of gas and 200,000 bpd of produced water with a storage capacity up to 1.6 million barrels.

Currently, gas will have to be re-injected until it can be exported.
Produced water will be cleaned up before being disposed in the sea while seawater will be injected to maintain reservoir pressure.

The FPSO will be spread-moored in about 2400 metres of water with oil tandem-offloaded to a tanker.

Aker Energy has not started a tender process for the subsea production system and subsea umbilical, riser and flowline system. Sources previously told Upstream that it wants to dispense with invitations to tender altogether and push through direct awards to Subsea 7 for the SURF package and Aker Solutions for the SPS.

However, it was learned this week that an “open, but limited bidding process” could start later this summer, at least for the SURF, amid signs that Aker Energy’s resolve to go with a direct award solution is “weakening progressively.”

It is unclear what Pecan’s subsea layout is under the revised development plan.
However, in an environmental scoping document completed in mid-May, a “tentative” subsea layout involved 14 producers and 12 water-alternating-gas injectors spread across four drill centres equipped with multiphase pumps.

These wells will be linked to the FPSO via 10-inch and 12-inch flowline loops and steel catenary risers, with four umbilicals also needed.

There have been suggestions in the market that because of unresolved issues, a final investment decision on the Greater Pecan project could be delayed to 2020, delaying first oil from 2022 to 2023.

For example, an environmental impact report must be produced (and approved by government and project lenders) and this could take between eight and 12 months to complete.

So, even if work on the EIA report began in May (the date of the environmental scoping document), then it may only be finalised in early 2020.
Nevertheless, an Aker Energy spokesman said FID “is still targeted for 2019.”

He said: “The Environmental & Social Impact Assessment process is progressing in accordance with Ghanaian environmental and social due diligence regulations. In parallel, lenders are being provided with the necessary environmental and social information ahead of an FID.

“We are in an ongoing, collaborative dialogue with the authorities as we work towards an approval of the PDO (development plan), at which point we will award contracts and make our FID together with our partners.

“As previously communicated, while the PDO feedback extended our timeline, we consider it a natural part of the process as the project involves significant investment with operations and revenues impacting many stakeholders.”

The spokesman added: “Our organisation has only been in existence for a year-and-a-half and we are very pleased with the progress we’ve made to date.”

Greater Pecan lies in the Deepwater Tano-Cape Three Points block where Aker has a 50% stake with Lukoil holding 38%, GNPC on 10% and Fueltrade with 2%.

Source: upstreamonline.com