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    SBMO   NL0000360618


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ExxonMobil unit orders fourth FPSO for Stabroek

11/19/2021 | 09:21am EST


EEPGL has contracted SBM Offshore to build a 250,000 bpd vessel that will be installed at Yellowtail, the fourth development target in Guyana’s offshore zone


WHAT: SBM Offshore is slated to build the FPSO that will be installed at the Yellowtail oilfield.

WHY: The Dutch firm has teamed up with McDermott International because of challenging market conditions.

WHAT NEXT: Funds for the second phase of the contract can only be released after FID on the Yellowtail development project.


SBM Offshore of the Netherlands has won a contract from a subsidiary of the US-based super-major ExxonMobil for construction of the fourth floating production, storage and off-loading (FPSO) vessel to be installed at the Stabroek block offshore Guyana.

The Dutch company announced the award on November 17, saying in a statement that it had been tasked by Esso Exploration and Production Guyana Ltd (EEPGL) with performing front-end engineering and design (FEED) work on the FPSO, which will be used to develop the Yellowtail section of Stabroek. It also noted that the contract would be implemented in two phases.

With the signing of the deal, it explained, EEPGL can release the funds necessary for the first phase of work – namely, carrying out FEED services and obtaining the Fast4Ward® unit that will serve as the hull of the FPSO. The company will then release funds for the second phase of work – which will involve the construction, installation, lease and operation of the vessel for up to two years – after it makes a final investment decision (FID) on the Yellowtail project, subject to the Guyanese government’s approval of its development plan.

Fast4Ward® design

SBM Offshore said it intended to execute the contract within the framework of its Fast4Ward® programme, which was designed to accelerate FPSO construction through the use of standardised components, including a multi-purpose hull and regular topsides modules. EEPGL’s new FPSO will be the sixth Fast4Ward® vessel ever made, it noted.

When finished, the FPSO will able to support the production of 250,000 barrels per day (bpd) of oil and 450mn cubic feet (12.74mn cubic metres) per day of associated gas. Additionally, it will have a water-injection capacity of 300,000 bpd, and its storage facilities will be able to hold up to 2mn barrels of crude oil.

Neither EEPGL nor SBM Offshore has disclosed the value of the contract or the anticipated delivery date for the new vessel. Newbuild FPSO units of similar size typically carry a price tag of $2.5-3.0bn and may take more than two years to construct.

Working with a partner

SBM Offshore will not be working alone. Instead, it has teamed up with McDermott International to set up a special-purpose company (SPC) for the turnkey part of the project. (McDermott will hold 30% of the SPC, and the Dutch service provider will have the remaining 70% and retain full ownership of the FPSO.) According to the statement, this arrangement will help SBM Offshore strengthen its execution model despite the challenges currently facing global oil and gas markets. It will also benefit EEPGL by applying the partners’ experience in engineering, procurement and construction (EPC) projects and their combined fabrication and engineering capacity to work on the FPSO.

Bruno Chabas, SBM Offshore’s CEO, said: “SBM Offshore is proud to announce ExxonMobil has awarded the contracts for the fourth FPSO to be deployed in Guyana. When finished, the FPSO will be the largest producing unit ever built by the company. This project again demonstrates the value that our industry-leading Fast4Ward® programme continues to bring to our clients and other stakeholders. We are also pleased to announce our partnership with McDermott and look forward to working together through the execution phase and deliver this world-class project.”

Samik Mukherjee, McDermott’s executive vice-president and COO, also struck an upbeat note. “Our people and resources bring the proven project execution, integrated engineering and modularisation capabilities essential for delivery assurance and success,” he commented. “We will align these strengths with those of SBM Offshore to drive a cohesive, efficient execution strategy together.”

Local content

The Dutch company issued its statement shortly after Reuters reported that EEPGL had begun negotiations on the fourth FPSO contract. Two sources close to the matter told the news agency that one of the key subjects under discussion was a proposal for building some of the components of the FPSO in Guyana itself.

The sources did not say whether any specific local content contracts were on the agenda, but Reuters noted that the proposal was in line with the Guyanese government’s efforts to ensure that local firms have the opportunity to contribute to hydrocarbon projects. It quoted Bharrat Jagdeo, the country’s vice-president, as saying: “We are hoping that more and more of the components could be fabricated in Guyana.”

EEPGL has now awarded four Stabroek-related FPSO construction contracts to SBM Offshore. The Dutch-based company has already completed two such vessels for the project – Liza Unity and Liza Destiny, which have been installed at the Liza-1 and Liza-2 production sites respectively. The third, which will be known as the Prosperity, is still under construction at the Keppel shipyards in Singapore.

Equity in the Stabroek block, which contains more than 10bn barrels of oil equivalent (boe) in recoverable reserves, is split between ExxonMobil Guyana, the operator, with 45%; Hess Guyana Exploration, with 30%; and China National Offshore Oil Corp. (CNOOC), with 25%. The partners brought Liza-1, their first development project, on stream in December 2019, and the oilfield is now yielding about 120,000 bpd. They are on track to launch Liza-2 in early 2022, followed by Payara in 2024 and Yellowtail in 2025.

©2021 bne IntelliNews , source Magazine

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EXXON MOBIL CORPORATION -1.50% 72.17 Delayed Quote.17.94%
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