Page 16 - DMEA Week 45

DMEA LNG DMEA

BP, Kosmos scale back GTA expansion

WEST AFRICA BP and its partner Kosmos Energy have scaled project globally,” Inglis said, “with limited
back expansion plans at the Greater Tortue upstream capital requirements expected to be
The partners have Ahmeyim (GTA) LNG project off Senegal and less than $1bn gross to first gas.”
reduced the capacity Mauritania, the latter announced on November What is more, Kosmos expects to fund its
of the project’s second 9. share of phase-two costs entirely using cash
phase from 7.5mn tpy The project’s second phase was expected to flow from the first one. Breakeven costs for its
to 2.5mn tpy. raise its liquefaction capacity from 2.5mn tonne LNG are projected to come to just above $4
per year to 10mn tpy. Reporting its third-quar- per mmBtu for Asian deliveries and even less
ter results, though, Kosmos said the expansion for European ones, thanks to the lower capital
would add only 2.5mn tpy, bringing the total to costs.
5mn tpy. Kosmos has been hit hard by the pandemic
The partners took the decision to reduce cap- and the resulting slump in oil and gas demand.
ital costs. The 5mn tpy capacity represents “the It reported a pre-tax loss of $36.5mn in the third
sweet spot for leveraging all the major infra- quarter, versus a $39.5mn profit a year earlier, as
structure from phase one,” Kosmos CEO Andy revenues fell 37% on low prices and production
Inglis told investors in an earnings call. cuts.
BP, Kosmos and their partners Senegal’s Pet- Kosmos’ share of capital costs at GTA is antic-
rosen and Mauritania’s SMPHM took a final ipated to be around $725mn between 2021 and
investment decision (FID) on GTA’s first phase 2023, Inglis said. But the company has estab-
in December 2018. First gas was scheduled for lished “a financing path” to cover this sum, so
2022 but has been pushed back to the first half of that it can retain its share in the project and earn
2023, because of disruptions caused by the coro- a sevenfold return on remaining investment, he
navirus (COVID-19) pandemic. said.
The group were also hoping to take FIDs on Kosmos is talks with BP to sell the FPSO to an
second and third phases at GTA this year, but off-balance sheet, special purpose vehicle (SPV)
those milestones have been delayed until mid- for the back cost paid so far, or around $160mn
2022 and mid-2023 respectively. net to Kosmos, the CEO continued. The pair aim
The second phase will utilise spare capacity at to close the deal in the first quarter of next year.
the subsea infrastructure being developed for the The SPV will cover all future capital obligations
first phase, Kosmos’ Inglis explained. The orig- relating to the FPSO, funding a further $160mn
inal floating production storage and offloading of Kosmos’ costs. The company also plans to refi-
(FPSO) will also be expanded for the new stage, nance a loan in 2021 in order to secure an extra
without the partners needing to acquire a new $100mn.
one, he said. A second gas export line from the These moves are expected to fully cover Kos-
FPSO to the hub terminal will also no longer be mos’ 2021 costs. It hopes to cover the remaining
required. $300mn due in 2022 and 2023 with direct invest-
“As a result, we believe phase two will be the ment in Mauritania and Senegal, which it hopes
most competitive brownfield LNG expansion to obtain by mid-2021. ™

P16 www. NEWSBASE .com Week 45 12•November•2020