Adds capex increase, details of project, company quote
Oct 30 (Reuters) - Capital costs to develop the SNE oil field off Senegal have risen 40% to $4.2 billion, as the project partners have decided to buy rather than lease a ship for the project, Australia's FAR Ltd FAR.AX said on Wednesday.
FAR, a minority partner, said the project will now buy a floating production, storage and offtake (FPSO) vessel rather than lease one, but as a result, a larger proportion of the total capital cost will be debt-funded.
FAR said the updated plan will help it line up funding for its share of the project, which it expects to announce "in the coming weeks".
Financing has been in limbo amid uncertainty over the development plan and an arbitration in which FAR is challenging operator Woodside Petroleum's WPL.AX acquisition of a 35% stake in the project in 2016. The arbitration is due to be resolved by the end of this year.
Breakeven costs for the project are around $33 a barrel for the life of the field and as low as $22/bbl for initial oil production, FAR said. That compares with the current Brent oil price of about $61/bbl.
FAR Managing Director Cath Norman said the strong economics of the project mean the value of FAR's share is forecast to triple between now and first oil expected in late 2022.
"This is a terrific result for FAR shareholders, especially given this estimate does not take into account the anticipated upside opportunities," Norman said.
FAR currently owns 15% of the project, although its stake will reduce to 13.67% if the Senegal government exercises an option to increase its stake in the venture.
Woodside Petroleum WPL.AX was not immediately available to comment. Earlier in October, Woodside said it aims to sign off on the project before the end of 2019, ahead of a ruling on the arbitration.
The project is aiming for production of up to 100,000 barrels per day in its first phase.
(Reporting by Devika Syamnath in Bengaluru; editing by Sonali Paul and Richard Pullin)
((Devika.Syamnath@thomsonreuters.com; +91 80 6749 1130;))
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