Enauta firms up FPSO deal for Brazilian field with Yinson

Brazil’s oil and gas company Enauta has signed a Letter of Intent (LoI) with Malaysia’s Yinson for the provision, operation and maintenance of a floating, production, storage and offloading (FPSO) vessel, which will be used for the Atlanta field, offshore Brazil.

Enauta informed on Monday that the deal was signed with Yinson Holdings Berhad, through its subsidiary Yinson Acacia. The FPSO acquisition and adaptation cost will be around $500 million.

Lim Chern Yuan, Yinson Group Chief Executive Officer, commented: “We are confident that the great working relationship between Yinson and Enauta, which has been the foundation of our very fruitful MoU and LOI negotiations, will continue to see us through the execution of the project and its subsequent operations. We believe that this will ultimately allow both parties to reach our shared goal of advancing Brazil’s energy industry through solutions that are as sustainable as possible.”

Comprising the initial activities related to detailed engineering and long lead item commitments of FPSO OSX- 2, this deal considers the adaptation of the FPSO unit by Yinson through a Turnkey Engineering, Procurement, Construction and Installation (EPCI) contract with warranty, operation and maintenance for 24 months.

Flemming Grønnegaard, Yinson Offshore Production Chief Executive Officer, said that emission-lowering technologies had been included in the FPSO’s design and added: “We believe that Yinson and Enauta’s joint commitment in pioneering low-emission designs will pave the way for the FPSO industry to contribute towards mitigating the world’s climate change issues.”

The new FPSO, for which Enauta has an exclusive purchase option, is planned to be used for the Definitive System (DS) of the Atlanta field. Before the beginning of the DS production, Yinson will have the option to purchase the unit linked to financing.

If the option is exercised, it will be linked to charter, operation and maintenance contracts for a period of 15 years, which may be extended for another five years, totalling $2 billion for the period of 20 years.

Carlos Mastrangelo, COO at Enauta, explained: “In our understanding with Yinson, we have continuously ensured the implementation of viable technologies for minimizing carbon emissions. We reaffirm that the adaptation of this FPSO unit will be a pioneering project in terms of avoided emissions, optimizing its operational and environmental efficiency.”

The signing of this deal follows the signing of a binding Memorandum of Understanding (MoU) between Yinson and Enauta on 27 August 2021 to engage in exclusive negotiations for the potential supply and charter of the FPSO.

According to Enauta, the bidding process for selecting the main equipment suppliers is progressing as planned, while the capex related to well drilling and subsea equipment remains estimated at $500-700 million.

The conditions agreed upon in the LoI will be subject to the signing of the definitive contracts, which should occur upon the Final Investment Decision (FID) in the first quarter of 2022.

Located in the Santos Basin, the Atlanta field is operated by Enauta Energia, a wholly-owned subsidiary of Enauta, which also has a 100 per cent interest in this asset. The field is currently producing through an Early Production System (EPS) – comprising three wells connected to the FPSO Petrojarl I.

Last week, Enauta informed the drilling of an additional well in the EPS of the Atlanta field was approved. The new well is expected to start production in early 2023.

It is worth noting that the Atlanta field’s FPSO will be Yinson’s third project award in Brazil, with the earlier two awarded assets on track for completion in 2023 and 2024, respectively.