Page 14 - LatAmOil Week 11 2020

LatAmOil
NEWS IN BRIEF
LatAmOil
LNG
Klaipedos Nafta: Services
agreement for LNG terminal
in Brazil enters into force
As UTE GNA I Geração de Energia (GNA) has adopted remaining corporate decisions and received lenders approvals, the operation and maintenance services agreement signed between Klaipedos nafta (KN), KN Açu Serviços de Ter- minal de GNL and GNA, regarding the provi- sion of operations and maintenance services for GNA’s LNG terminal, located at the Port of Açu in the state of Rio de Janeiro, has become effective.
Klaipedos Nafta, March 17 2020
Golar Power to develop
LNG import terminal
in Port of Suape, Brazil
Golar Power signed on March 13 a Protocol of Intentions with the State Government of Per- nambuco to develop an LNG import terminal in the Port of Suape, located in the north-east of Brazil. With operations scheduled to start in the second half of 2020, the project includes infra- structure for the supply of natural gas and LNG to generate electricity, in addition to meeting the demands of industries, commerce, LNG stations and households. To this end, Golar Power will work in partnership with the local gas distri- bution company, Companhia Pernambucana de Gás Natural (Copergás) to bring natural gas to regions of the State that are not yet served by traditional pipeline networks. The project is expected to use the existing port infrastructure owned by the State Government.
The State of Pernambuco has an estimated population of 9.6mn people who will benefit from the installation of the terminal. If success- fully developed the terminal is expected to ben- efit the economy of cities in the interior of the State, in regions not served by pipeline, where natural gas will be delivered by road using LNG ISO-Containers. Golar Power plans the inte- riorisation of LNG in the country through a strategic plan that contemplates the Northeast as a priority region for small-scale distribution. Suape is already Brazil’s largest hub for liquid bulk and gases and, now, it will be one of the main LNG distribution hubs in the north-east, with full integration of sea and land transporta- tion modes.
The Golar Power terminal intends to use an existing LNG carrier, permanently docked at the Suape Port. The vessel will act as a supplier
to truck mounted LNG ISO-Containers. These vehicles will then distribute LNG to cities within a radius of up to 1,000 km. Initial trucked vol- umes are estimated at 800 cubic metres of LNG per day, equivalent to approximately 480,000 cubic metres of natural gas per day. LNG will also be distributed from Suape to other states in Brazil through cabotage, using small-scale LNG carriers that will be supplied by transshipment and used to transport LNG to other ports in the region. Capex requirements for the project are expected to be funded from Golar Power’s inter- nal resources and operating cash flow.
Final development of the project remains dependent upon regulatory approvals and con- clusion of commercial agreements.
Golar LNG, March 16 2020
UPSTREAM
Bahamas Petroleum
provides update on
the timing of the
Perseverance-1 well
Bahamas Petroleum Co., the oil and gas explo- ration company with significant prospective resources in licences in The Commonwealth of The Bahamas, has provided an update in relation to the timing for the drilling of Perseverance-1, its first exploration well in The Bahamas.
As a result of the rapidly unfolding impact COVID-19 is having on operations, the com- mencement of drilling is now anticipated to be in late May or early June 2020 (compared to prior estimate of April 2020). Notwithstanding the recent decline in oil prices, farm-in discussions in the context of the Company’s overall funding strategy continue to advance.
The Company’s primary objective, as a
prudent operator, is to ensure the safe and responsible drilling of Perseverance-1 on budget, and in fulfilment of the Company’s licence obli- gation to the Government of The Bahamas, which is an initial exploration well in 2020.
The Company considers that safe, responsible and cost-effective drilling can best be delivered by ensuring continuous operations through- out the entire period of the drill plan. For this to occur, the Company, its major contractors, and all relevant staff and personnel must be operationally ready, with all necessary equip- ment available, all provisioning organised and a logistical plan completed, such that all aspects of operations can be safely executed uninterrupted throughout the duration of intended drilling activities.
The Company’s well planning to-date has thus involved putting in place arrangements for relia- ble access to the range of globally-sourced equip- ment, goods, services and personnel required to execute the designed well, continuously for the 45- to 60-day critical period of anticipated drilling activity. For this reason the Company has also sought to plan for drilling to occur out- side of the peak risk period for hurricanes in The Bahamas (being August to October), given that any unexpected downtime during operations introduces additional commercial risk, as from the Company’s perspective downtime periods have to be paid for at essentially the same day rate as normal drilling operations. Any such down- time periods would therefore materially impact the overall cost of operations, and consequential business loss insurance is not available to cover such scenarios.
As shareholders will be aware, in recent weeks there has been a material adverse change in the global operating environment, characterised by the rapid spread of the COVID-19 virus and the extraordinary, unprecedented worldwide response to this issue. This in turn is creating dis- ruptions to global supply chains (especially for goods and services emanating from Asia), lim- iting free movement for some project essential supplies, and creating onerous restrictions on travel for the movement and mobility of key pro- ject personnel, staff and contractors. As relates to the Company, this in particular includes: creating challenges in terms of determining a mobilisation window for a rig where continuity of operations throughout a 45 to 60 day drilling campaign can be assured; impacting on the abil- ity to plan for free movement of mission critical personnel to and from the drilling rig during operations, and indeed more broadly, impacting on the ability to finalise selection of an appropri- ate drilling rig to be available at the right time in the place required; and necessitating a review of the integrity and availability of required equip- ment, goods and services, and consideration of any potential impacts to pricing and quality.
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Week 11 19•March•2020