By Ed Stoddard
CAPE TOWN, Nov 1 (Reuters) - Ophir Energy OPHR.L can go ahead with its Fortuna floating liquefied natural gas project off Equatorial Guinea with or without new partners because the cost estimates have halved to around $450 million, a senior executive said on Tuesday.
"The capital costs have come down to such a huge degree. The capital is about 50 percent from what we expected a couple of years ago," Oliver Quinn, Ophir's director of new business, told Reuters on the sidelines of the Africa Oil Week conference.
He said Ophir's equity limit was $150 million because the company did not want to overexpose its balance sheet to the project and the government of Equatorial Guinea would put up to $90 million into the venture.
The remainder of the funding could come from a partner, debt or "loans to the project as part of the gas sales agreement," Quinn said.
Oilfield services company Schlumberger SLB.N walked away from the deal in June. Ophir said in September it had short-listed four potential partners for the project, which involves placing a ship with production facilities over an offshore field. Quinn said the project - which still awaits a final investment decision - could go ahead without partners because depressed oil and gas prices had forced service providers to cut their costs.
"It's the market cycle and the level of competition in the services market. Cost estimates were different when the oil price was higher," he said.
Lower costs have also prompted the company to pursue deep water exportation well drilling projects again, with one scheduled offshore of Ivory Coast in 2017 - the company's first in over two years.
"We are focused on regrowing our Africa portfolio. Drilling costs are now extremely low so we are selectively taking advantage of that," Quinn said.
(Editing by Susan Fenton)
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.