VAALCO Energy has provided an update on the Etame field reconfiguration in conjunction with the replacement of the existing Floating Production, Storage and Offloading unit (FPSO) with a Floating Storage and Offloading vessel (FSO) offshore Gabon.
VAALCO anticipates that all of the associated engineering, long-lead equipment and significant contracts are proceeding in-line with the project timelines and expected delivery schedules for the deployment of the FSO in the third quarter of 2022. Field reconfiguration activities are expected to begin in March 2022, as planned. The Cap Diamant, a double-hull crude tanker built in 2001 that is being re-engineered as the new FSO, arrived at a shipyard in Bahrain in late February 2022 on schedule, for the final modifications and certifications. VAALCO expects the vessel will begin sea trials in late June before being mobilized to Gabon.
Compared to the current FPSO agreement, the new FSO will reduce storage and offloading costs by almost 50%, increase effective capacity for storage by over 50%, and is expected to lead to an extension of the economic field life, resulting in a corresponding increase in recovery and reserves at Etame. Current total field level capital conversion estimates are $40 to $50 million gross ($26 to $32 million net to VAALCO). This capital investment is projected to save approximately $20 to $25 million gross per year ($13 to $16 million net to VAALCO) in operational costs through 2030, giving the project a very attractive payback period of less than two and a half years.
George Maxwell, VAALCO’s Chief Executive Officer, commented, “We are pleased that the field reconfiguration and FSO conversion are moving along on time and within budget. This new FSO, which is scheduled to be online in September 2022, costs almost 50% less than the current FPSO and is expected to reduce our overall costs by approximately 17% to 20%. This will significantly improve our margins, enhance our cash flow generation and sustain our operational excellence and robust financial performance at Etame through 2030.”