MODEC secures financing to build FPSO for Eni’s block offshore Mexico

Japan’s MODEC has concluded financing for an FPSO charter project, which will be used on the Eni-operated Area 1 block offshore Mexico. 

To remind, Eni’s development plan for the discoveries of Amoca, Miztón, and Tecoalli within the Offshore Area 1 located in the shallow waters of the Campeche Bay was approved by Mexico’s National Hydrocarbon Commission at the beginning of August 2018.

In October 2018, Eni awarded a Letter of Intent (LOI) to MODEC for the supply, charter, and operations of an FPSO vessel for deployment in Area 1.

MODEC was put in charge of engineering, procurement, construction, mobilization, installation and operation of the FPSO, including topsides processing equipment as well as hull and marine systems.

On Monday, April 15, 2019, MODEC, Mitsui & Co., Ltd. and Mitsui O.S.K. Lines, Ltd. (MOL) announced that Mitsui and MOL had participated in a long-term charter business operated by MODEC for the purpose of providing an FPSO for use in the Area 1 block offshore Mexico and a loan agreement for the project was entered into on April 12, 2019.

Mitsui and MOL invested in Area1 Mexico MV34 B.V. (MV34), a Dutch company established by MODEC, which will engage in FPSO leasing, operations and maintenance services. MODEC and Mitsui & Co., Ltd. each have a 35% participating interest in the MV34 and Mitsui O.S.K. Lines, Ltd. has the remaining 30% interest.

In December 2018, MV34 concluded the charter agreement with Eni. The charter contract initially runs for 15 years, with options for extension every year thereafter up to five additional years.

The loan agreement on a project finance basis was signed by Sumitomo Mitsui Banking Corporation (lead arranger), MUFG Bank, Ltd., Mizuho Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited, Société Générale, BNP Paribas, Oversea-Chinese Banking Corporation Limited, Clifford Capital Pte. Ltd. and Crédit Industriel et Commercial.

This is the first project finance for the FPSO project in Mexico.

According to MODEC, Mexico has seen numerous significant discoveries of expansive offshore oil fields in recent years, thereby giving rise to expectations of fresh demand for additional FPSO in the region.

Construction of the FPSO is planned to be completed in 2021, and the FPSO will be deployed for the development of the Area 1 block at water depths of about 32 meters. The FPSO will be capable of processing 90,000 barrels of crude oil per day, 75 million cubic feet of gas per day, 120,000 barrels of water injection per day and have a storage capacity of 900,000 barrels of crude oil.

Area 1 block is owned by a consortium of two companies including Eni Mexico as operator and Qatar Petroleum, which farmed into the block last December. The agreement is subject to the authorization by the Mexican authorities and Eni will continue to be the operator.

Offshore Energy Today Staff

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