Page 5 - EurOil Week 48 2020

EurOil COMMENTARY EurOil

Irish energy security and raise energy costs for from October 30 until November 30, raising
consumers. The country relies on several large concerns that the deal might fall through.
offshore gas deposits to meet around 60% of its
consumption although output at these fields is Arrangements
now declining. The industry marked the end of The farm-out agreement is conditional on
an era in July, when the Kinsale area fields were SpotOn ensuring that it has at least $166mn of
closed down after over four decades of produc- funding at hand for the EDP, as well as gov-
tion, having flowed nearly 2 trillion cubic feet ernment approval. SpotOn will also supply a
(57bn cubic metres) of gas during their lifetime. $5mn non-resource loan to Providence to fund
Critics of Irish energy policy say that clos- its share of preparatory and permitting work
ing the door on domestic development simply costs. It has also pledged to cover 50% of the
increases the country’s dependency on imports. cost of the EDP and the field’s full-scale devel-
This creates risks and raises costs, while also, opment, while also lending funds to Prov-
paradoxically, increasing the emissions of the idence and Lansdowne to cover half of their
energy Ireland consumes, given the distance that expenditure.
imports must traverse. In return, SpotOn will gain 80% of net pro-
Unless the current government or future duction cash flow until the debt is paid, after
ones reverse the course, which at present seems which point the share will fall to 50%. Once the
unlikely, Barryroe will be the last oil discovery to EDP work programme is finished and Barryroe
be developed in Ireland. yields its first oil, expected in either 2023 or 2024,
Progress at the field has been slow. Provi- SpotOn will also gain an option to subscribe for
dence has been struggling to secure a farm-in 60mn shares in Providence at a strike price of
partner for years, with two deals collapsing in €0.17 ($0.20) per share within six months.
2015 and 2018. The last agreement was with The EDP programme will entail sinking three
China’s APEC, which failed to come up with the production wells and a water injection one. The
necessary funds to complete the transaction. wells will be connected to a subsea manifold, tied
Providence announced in April that SpotOn to a leased floating production storage and off-
was the preferred farm-in candidate, and the ini- loading unit. Well planning is at an advantaged
tial plan was to strike a binding deal in October. stage, and the SpotOn-led group aims to mobi-
The pair extended the exclusivity period for talks lise a rig in late 2022. ™

Week 48 03•December•2020 www. NEWSBASE .com P5