Woodside Energy’s FPSO has arrived offshore Senegal to serve the Sangomar field, with Capricorn Energy keeping a careful eye on the exact timing of first oil.
The Australian major said the Léopold Sédar Senghor vessel had arrived, around 100 km offshore Dakar. This, it said, marks the next phase, which includes commissioning the FPSO and hooking up the 23 wells on the project.
Modec, which converted the vessel, said the FPSO had left Singapore for Senegal on December 22, 2023.
Woodside said production from the 100,000 barrel per day FPSO on Sangomar was due to occur in mid-2024. When exactly it starts is a subject close to Capricorn’s interests.
First oil
London-listed Capricorn noted that if first oil occurs before June 30, 2024, Woodside would owe it $25 million – or $50 million. The difference depends on the price of Brent during the first six months.
Capricorn explained that first oil was signified by continuous production over 72 hours, where at least 30,000 barrels are produced for sale.
Woodside is not due to provide any additional payment should Brent be less than $55 per barrel – or come any later than June 30.
Should Capricorn receive payment, the company has said it would pay out the sum to shareholders.
Woodside CEO Meg O’Neill said the arrival of the FPSO was an important step towards first production. “We are proud to be Senegal’s first offshore oil project and firmly believe that this project will prove to be important to Senegal’s future development and prosperity,” she said.
Woodside reported the delays – and higher costs – on Sangomar in July 2023.
Capricorn also noted the ongoing dispute in Senegal over a potential tax payment. The company received confirmation from the tax authorities that no tax would be due on the sale of its stake in Sangomar to Woodside. Now, though, Senegal is asking for $25mn plus interest and penalties.
Capricorn said it would “vigorously defend” its position.
FAR cry
Australia’s FAR also previously held a stake in Sangomar, before selling out to Woodside in 2021. The contingent payment is worth up to $55mn. This mechanism is based, though, on a 45% of what would have been FAR’s share of barrels in the project, sold over the previous year with an oil price multiplier.
The contingent payment to FAR terminates on December 31, 2027, or three years having passed since first oil, or the total contingent payment of $55mn being reached.
FAR has not commented on the FPSO’s arrival. However, in November, the minnow said there was likely to be a first contingent payment in early 2025. The FAR board expects Woodside will pay out the full $55mn before the long stop date of 2027. The company is likely to sell off the contingent payment right closer to first oil.
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