Update: Rosebank field faith hangs in balance as Chevron scraps FPSO order

December 14, 2016

Chevron has canceled the order for an FPSO unit that was slated for the development of the Rosebank field in the UK North Sea.

According to Hyundai Heavy Industries, Chevron sent a termination notice on Tuesday, December 13, for the 2.3 trillion Korean Won order. Converted to U.S. dollars, the order was valued at around $1.85 billion.

The South Korean shipbuilder said the original contract had been signed in April 2013 with Chevron North Sea Limited, which is a UK subsidiary of the U.S. oil giant.

This date corresponds to the date when Chevron ordered a floating production storage and offloading unit for the Rosebank development located west of the Shetland Islands.

However, a few months later, in November 2013, Chevron decided to defer its Rosebank project taking more time to work “with partners to improve the project economics.”

The Rosebank Field, discovered in 2004, is estimated to contain total potentially recoverable oil-equivalent resources of 240 million barrels.

Offshore Energy Today has reached out to Chevron seeking comment on the termination, and the repercussions on the Rosebank development.

Important part of portfolio

In a statement sent to Offshore Energy Today, a Chevron spokesperson confirmed the FPSO order termination, adding that the company “continues to value HHI as an important member of its world-wide supply chain and looks forward to exploring future business opportunities…”

As for the Rosebank project, Chevron spokesperson said the company is continuing through Front End Engineering and Design (FEED).

“Chevron is working closely with its joint venture participants to further improve project value and decrease execution risk as we progress through FEED. The Rosebank development is an important part of Chevron’s U.K. portfolio, where the company has been active for more than 50 years, and Chevron is committed to maximising the economic recovery of its U.K. resources,” the spokesperson said.

When asked about the expected final investment decision date, the Chevron spokesperson said it was too early to say anything on the FID, as the FEED is yet to be completed.

“The Rosebank project is progressing through Front End Engineering and Design (FEED). As part of that process, Chevron continues to work closely with its joint venture participants to review project economics and perform value engineering. We are encouraged by the significant progress made in optimizing the Rosebank facilities and we remain focused on making decisions that are based on improving project value and decreasing execution risk. Given these ongoing efforts, it remains premature to communicate a Final Investment Decision (FID) date for the project,” the spokesperson explained.

Partners

To remind, Canadian Suncor in August announced it would acquire a 30 percent stake in the project from Austrian OMV.

At the time, Rosebank was in the Front End Engineering and Design (FEED) phase and with a design capacity of 100,000 barrels of crude oil and 80 million cubic feet of natural gas per day.

Suncor completed the acquisition in October. Chevron North Sea is the operator of Rosebank with a 40 percent stake, with partners Suncor (30%), OMV (U.K.) Limited (20%) and DONG E&P (10%).

Regarding OMV’s 20 percent ownership, the company is expected to exit the Rosebank project as it in November agreed to sell its UK North Sea business to Siccar Point Energy Limited for up to $1 billion.

Dong Energy might exit as well, as the company has recently announced a decision to divest its whole oil and gas business to focus on renewables.