BW Offshore in venture with Japanese firms and Macquarie Bank for Barossa FPSO to serve Darwin LNG

Monday, 13 September 2021
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BW Offshore, the platforms company listed on the Oslo stock exchange, has formed a partnership with global infrastructure investors for the equity financing of the floating storage and offloading (FPSO) unit for the Barossa gas field offshore Australia to prolong the lifespan of the Darwin LNG plant.

BW Offshore already has a fleet of 14 FPSOs with potential for growth to meet the reliable clean energy needs provided by natural gas.

The Barossa FPSO Services contract has an initial production period of 15 years, with options to extend the production period (in the aggregate) for a further 10 years.

The contract value based on the initial production period of 15 years is US$4.6 billion.

BW Offshore will be responsible for engineering, procurement, construction, installation, and operation of the FPSO.

The FPSO will be turret moored with a new built hull based on BW Offshore's Rapid-Framework design.

Initial gas production from the FPSO is expected during the first half of 2025.

The Barossa FPSO will be financed by a 14-year combined construction and long-term debt facility of US$1.15Bln and US$240 million from the equity joint venture.

Pre-payments

There will also be around US$1Bln in pre-payments by the Barossa gas field operator, Adelaide-based LNG and energy company Santos, and the Barossa Upstream joint venture partners during the construction period.

“The joint venture agreement has been signed by all parties and completion of the agreement is subject to certain customary regulatory approvals which are expected within the next month,” said BW Offshore.

The FPSO joint venture comprises BW Offshore with 51 percent and with a further 25 percent held by ICMK Offshore Investment, a venture comprising Japan’s Itochu Corp. and a subsidiary of the Japanese Meiji Shipping Group.

The Australian financial group, Macquarie Bank, will own the remaining 24 percent.

Santos, which is currently finalizing its agreed take-over of Papua New Guinea LNG stakeholder Oil Search, took a positive final investment decision in March 2021 on the Barossa field development.

The Barossa project represents the biggest investment in Australia’s oil and gas sector since 2012.

The Santos-operated Darwin liquefaction plant in the Northern Territory has the capacity to produce around 3.7 million tonnes of LNG per annum, mainly for Japanese buyers.

Santos has said Barossa and Darwin LNG life extension will create 600 jobs throughout the construction phase and secure 350 jobs for the next 20 years of production at the Darwin facility.

The FID came a year after Santos completed the acquisition of the assets of US major ConocoPhillips in northern Australia and the Timor Sea, including the existing offshore Bayu-Undan field providing the feed gas now for Darwin.

The Barossa development will comprise the FPSO, subsea production wells, supporting subsea infrastructure and a gas export pipeline tied into the existing Bayu-Undan-to-Darwin LNG pipeline. 

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