FAR Ltd., Melbourne, acknowledged it is in default of the most recent development cash call for the Sangomar oil project offshore Senegal, while operator Woodside Petroleum reiterated that first oil from Phase 1 of the project remains on track for 2023.
FAR told the Australian Stock Exchange that in the past few months Woodside has been running a program to re-scope, reschedule, and reprice the development to reduce capital expenditure. FAR said it made a strategic decision to preserve its cash while it awaits clarity on the project capital expenditure amendments.
In the interim, FAR said it is continuing to investigate selling all or part of the company’s 15% interest in the Rufisque Offshore, Sangomar Offshore, and Sangomar Deep Offshore (RSSD) production sharing contract and the joint operating agreement.
The company noted that if it has not fulfilled its financial obligations to the cash call within 6 months from the date of notification of the default, it will forfeit its participating interest without compensation.
Meanwhile, FAR has implemented additional cost cutting. The company has already made staff redundancies and all senior executives and non-executive directors have accepted a 20% salary or fee reduction effective July 1.
In the meantime, Woodside has scotched reports that Senegal has been forced to delay the project by up to 2 years because of the COVID-19 pandemic.
In a release, Woodside reiterated that first oil from Sangomar Phase 1 remains on track for 2023 and that it is working with the government, project contractors, and JV partners to optimize near-term spending while protecting the value of the investment and deliver first oil on schedule.
The $4.2-billion Sangomar development achieved final investment decision in January (OGJ Online, Jan. 15, 2020). The concept is a stand-alone floating production storage and offtake (FPSO) facility connected to 23 subsea wells and supporting subsea infrastructure.
The FPSO is expected to have a production capacity of 100,000 b/d of oil and will process the oil for direct offloading to export markets via tankers.
The current shareholding is Cairn Energy PLC with 40%, Woodside 35% and operatorship of the development phase, FAR Ltd. 15%, and Senegal national company Petrosen 10%.