McDermott International faces a claim for “maximum recoverable damages” linked to its failure to complete a contract for BP offshore Mauritania and Senegal.
Kosmos Energy reported the move today in its fourth quarter results. The company said it expected capital expenditure this year to reach $700-750 million, the same as it had projected for 2023.
High spending this year includes “higher than anticipated subsea expenses” at Tortue Phase 1. This was because of the need to replace McDermott with Allseas. McDermott began the work installing subsea pipelines in 2023 but then pulled out.
BP, acting on behalf of the partners, is leading the binding arbitration against McDermott. Kosmos, which has a 26.8% stake in the Greater Tortue Ahmeyim (GTA) project, said its share of recoverable damages was up to $160mn.
The move poses another challenge for McDermott, which is in the process of a tricky restructuring negotiation. The company faces a number of major claims against it, including a $940mn debt to Colombia’s Reficar.
To first LNG
Kosmos noted that subsea work had restarted in the fourth quarter of 2023 and should be completed by the end of the second quarter of 2024.
The first phase should begin producing gas in the third quarter of this year, Kosmos continued, reaching first LNG in the fourth quarter.
Overall, the company said, the GTA plan was making good progress. BP has drilled and completed four wells, with capacity “significantly higher” than the first gas requires.
The floating LNG (FLNG) vessel arrived offshore in the first quarter and is now being hooked up. The FPSO for the project is in Tenerife for inspection and repair of the fairleads, Kosmos said. The company expects the yard will complete this, and transit to the project site, early in the second quarter.
BP has signalled it is in no rush to proceed with further LNG plans in the area. Kosmos, though, has taken a more positive approach. BP withdrew from the Yakaar-Teranga licence in November, with Kosmos increasing its stake from 30% to 90%.
The US independent is now working with Senegal’s Petrosen on pre-front-end engineering and design (pre-FEED) work for the licence. This would involve providing “cost-competitive gas” for local consumption, combined with an offshore LNG facility.
Kosmos intends to bring in a partner to the licence in the second half of 2024. It would keep around 33% and remain operator.
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