Woodside’s Senegal oil project, get fillip as production vessel departs Singapore
A troubled production vessel has left Singapore bound for Woodside’s Sangomar oil development off the coast of Senegal.
Woodside Energy has notched an overdue milestone at its Sangomar oil project off Senegal after a production vessel finally departed Singapore months after causing a delay on the signature development.
The West Australian energy giant, in talks with Santos on a $80bn merger, owns 82 per cent of the oil and gas field being developed off the West African country and revealed in July that the development would now cost between $US4.9bn and $US5.2bn, marking a 7-13 per cent blowout.
While announcing higher costs, Woodside also said the project would be completed later than initially anticipated after repairs were required on the project’s floating production storage and offloading facility.
An FPSO is a floating vessel used by offshore oil and gas companies for the production and processing of hydrocarbons, and for the storage of oil.
Woodside said on Wednesday that the Leopold Sedar Senghor production unit had now left Singapore and would travel 12,000 nautical miles to its final destination, about 100km offshore Dakar, Senegal.
The company reiterated a target of mid-2024 for first production.
“Sangomar is Senegal’s first offshore oil development and we remain committed to working with the government of Senegal and local communities to ensure that the benefits from our investments are felt broadly across the country,” Woodside chief executive Meg O’Neill said.
The first phase of the Sangomar field development includes a stand-alone FPSO with subsea infrastructure and an expected production capacity of about 100,000 barrels a day.
Ms O’Neill said in July that while the repairs were unexpected, the company had to prioritise safety.
Sangomar is one of Woodside’s growth projects as it looks to boost its oil and gas production in emerging markets while also stepping up efforts to start producing hydrogen.
In June, Woodside said it had decided to proceed with the $US7.2bn deep water oil project in the Gulf of Mexico, which it expects to begin production in 2028. It said the final investment decision on Trion, of which it said its share would cost $US4.8bn, made financial sense because it had such large oil reserves, delivering lucrative returns for shareholders. Woodside said the project would deliver a rate of return of more than 16 per cent and the payback period would be less than four years.
Woodside had been looking to sell down its stake in July 2021. Senegal’s national oil company Petrosen holds 18 per cent, and Woodside said interest in acquiring a stake in the oil project had increased since Russia’s invasion of Ukraine.
Sangomar will produce sour crude similar to Russia’s Urals crude, which European refiners use.
Woodside has drawn the ire of environmentalists, however, for its commitment to expanding fossil fuel production.