BW Offshore has warned of possible delays to Premier Oil’s U.K. North Sea Catcher (SEN, 32/8) development because of late delivery of the hull for the field’s FPSO from a yard in Japan.
IHI Corp. is fabricating the hull at its Aichi works, but BW Offshore said “hull activities have slipped” and that delivery would not take place “in accordance with the contractual schedule.”
IHI’s scope includes the design, build, equipping and completion of a hull with accommodation, helideck and parts of the turret mooring system. The integration of the topside modules and completion of the FPSO will be performed in Singapore.
BW Offshore said, “A mitigation plan has been implemented to minimise the impact to the overall project schedule. Topside fabrication is developing as planned. At the end of the second quarter, more than 75% of the projected project cost has been committed. BW Offshore is closely monitoring progress and safety in all the project activities, ensuring that mitigating actions are implemented quickly if any deviation is detected.”
The company said Catcher remains within budget with first oil still expected in 2017.
BW Offshore said good progress was made during the quarter on engineering, procurement and construction activities. Construction of the turret mooring system is progressing well with the mating cone module completed and delivered to the hull fabrication yard.
BW Offshore’s scope includes the delivery of the FPSO, mooring system, installation and operation of the unit throughout the charter period.
The FPSO will have a processing capacity of 60 Mbbl/d of oil and a storage capacity of 650 Mbbl.
Meanwhile, following the explosion on the Cidade de São Mateus FPSO vessel off Brazil in February, work is ongoing to empty oil from it and disconnect it for transport to a yard for repairs.
BW said the disconnection of the unit has been significantly delayed by the approval process in Brazil.
The cost of repairs are still being estimated together with impact from impairment to be taken for damages incurred.
“As the unit is still at the field, it has been challenging to get access to make an accurate assessment of the damages, and consequentially also to decide the book value to be impaired,” the company said.
BW Offshore also warned that the short- and medium-term outlook for its products and services has changed due to the drop in oil price.
The company said, “Macro conditions for the offshore industry have significantly worsened with expected continued drop in capital expenditure.
“BW Offshore still expects outsourcing of production to be a cost-effective solution for oil and gas companies, but believes it is prudent to expect a prolonged downturn in orders being awarded.”
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