BW Offshore, the global operator of floating production, storage and offloading (FPSO) units, said the Barossa natural gas project for the Timor Sea was progressing as part of plans to prolong the lifespan of the Australian Darwin LNG export plant.
BW Offshore, which has main offices in Oslo and Singapore, said it continued to execute the Barossa FPSO project with overall completion on schedule at 67 percent at the end of April 2023.
“Hull blocks have been assembled in the floating dock and preparations for float out are progressing, with major equipment arriving at the topside construction yard,” explained BW Offshore in its first-quarter earnings report.
The company said that it also progressed its strategy of capturing value from non-core assets with the sale of “BW Opportunity” in the first quarter and the subsequent divestment of “BW Athena” in April.
The Darwin plant in the Northern Territory is operated by Adelaide-based Santos with capacity to produce around 3.7 million tonnes of LNG per annum, mainly for Japanese buyers, including JERA Co. Inc, the Asian nation’s largest LNG importer and power group.
The Japanese have participated in the Darwin LNG project since 2003 through the power companies that formed JERA and when the Australian plant was first operated by ConocoPhillips before the US major sold its stake to Santos.
Darwin LNG was constructed to receive feed gas from the Bayu-Undan gas field, located in the Timor Sea, and had contributed to the stable supply of LNG for almost 17 years before becoming depleted.
BW Offshore reported net profit for first quarter of $17.8 million, down from $41.3M in the previous quarter and $46.3M in the first three months of 2022.
“We deliver on our plan to generate value from our asset base through divestments and are discussing potential redeployment-related work for ‘BW Opportunity’ with its new owner,” said Marco Beenen, Chief Executive of BW Offshore.
“This reflects a strong FPSO market with oil and gas companies seeking efficient solutions for safe, secure and reliable production,” added Beenen.
Gross operating income for the three months came to $79.0M, down from $84.4M in the prior-year quarter and $104.9M in the previous quarter.
“The reduction is largely due to a non-recurring reimbursement recorded in fourth quarter 2022 for expenses incurred under the limited notice to proceed (LNTP) contract with Shell for the Gato do Mato (Brazil) project,” said BW Offshore.
In its Outlook, BW Offshore said it expected that the core units in the existing fleet would continue to “generate significant cash flow” in the time ahead supported by the $5.8Bln of firm contract backlog at end of March 2023, including the Barossa contract.
“The company is experiencing continued strong interest for infrastructure-type lease and operate FPSO projects, combined with continued access to equity and debt financing for field development initiatives with long-term production, low break-even costs and low carbon emissions,” it stated.
“Discussions are ongoing with the buyer of ‘BW Opportunity’ for EPCC work and an operations and maintenance contract related to a redeployment of the FPSO which can drive growth in the FPSO segment,” added BW Offshore.