Cairn Confident of Securing Sangomar Funding
London-listed oil and gas company Cairn Energy has provided an update of its operations including the progressing of the Sangomar Field Development offshore Senegal despite the having yet to attract the necessary funding for its share of the costs.
Cairn, which had spent nearly US$48.1 million on Sangomar’s pre-development activities by the end of 2019, has expressed optimism in the outcome of negotiations for the project’s funding that would enable the company “meet its share of development costs.”
The total project development cost for the offshore Sangomar oil field is estimated at US$4.2 billion.
“Cairn remains confident that it will be able to meet its share of expenditure and maintain current equity levels in the project,” Cairn said in its 2019 full-year report released on Tuesday.
The Rufisque Offshore, Sangomar Offshore, and Sangomar Deep Offshore (RSSD) joint venture comprises Carin Energy’s subsidiary Capricorn Senegal (40%), Woodside Energy (35%), FAR (15%) and Senegal national oil company Petrosen (10%) with the offshore project located within Senegal’s portion of the Mauritania-Senegal-Guinea Bissau Basin.
Cairn, which struck two concurrent exploration successes offshore Senegal in the fourth quarter of 2014, says in the report the immediate focus will be on the less complex reservoir units and testing other reservoirs to support gas export to shore with a target of 230 million barrels of crude from the first phase of Sangomar Field Development.
For now, Cairn says the project, which is located within the Sangomar Deep Offshore permit area, has entered the development execution stretch with associated activities likely to be carried out on schedule despite a few risks that had been identified in the first half of 2019.
Already, Woodside, the operator, completed the purchase contract for stand-alone floating production storage and offloading (FPSO) facility.
The development will have 23 subsea wells and supporting subsea infrastructure linked to a Modec-supplied FPSO with the capacity of around 100,000 bbl/day. The first oil is targeted in early 2023. The field is located 100 km offshore to the south of the capital Dakar.
According to an earlier Woodside briefing, the FPSO “will be designed to allow for the integration of subsequent Sangomar development phases, including gas export to shore and future subsea tie-backs from other reservoirs and fields.”
Cairn said Tuesday that it will, together with the JV partners, work “with all stakeholders to ensure that the Sangomar development delivers enduring benefits to the people of Senegal as a project of national significance and an anchor for economic and social development.”
The Senegalese government award of a 25-year Exploitation Authorisation for the Sangomar Field development plan in January this year was a major milestone for Cairn Energy and its JV partners and bolstered the West African country’s much dreamed about oil and gas supply stability.
Senegal has several pending national projects that hinge on the success of exploration and production of oil and gas, especially from its offshore blocks.
For example, the country’s national oil and gas company Petrosen has approved the proposed capacity expansion of the country’s SAR oil refinery from the current 1.2 million tons/year to 1.5 million tons annually.
Furthermore, Petrosen is banking on successful extraction of offshore natural gas to actualize Senegal’s gas-to-power program, key development in ensuring the country reduces the 1.1 million of its people without a connection to electricity and achieves universal electricity access by 2025.
The Sangomar Field Development project is also critical in Senegal’s plan to leverage on its offshore hydrocarbon resource to grow its foreign exchange reserves through the exportation of liquefied natural gas.
“Over the life of the field, total recoverable oil reserves are estimated to be ~500mmbbls with the development also including plans to export gas to shore for the domestic market,” said Cairn on Tuesday.