Falkland Islands’ $1.4. billion oil project remains on track for FID in mid-2025

Israel’s Navitas Petroleum is still anticipating a final investment decision (FID) for Phase 1 of its giant oil project in the North Falkland Basin (NFB) mid-year.

After delaying a final investment decision last year for its giant Sea Lion oil project in the North Falkland Basin (NFB) by bumping it to 2025 in the aftermath of a cost hike, Navitas continues to estimate Capex to first oil on Phase 1 to be around $1.4 billion and has entered into several front end engineering design (FEED) agreements.

This encompasses a memorandum of understanding (MoU) for a floating production, storage, and offloading (FPSO) unit, which is currently operating in the North Sea, along with various agreements relating to the provision of subsea equipment.

The Israeli player inked a detailed heads of terms deal in December 2021, followed by legally binding definitive documentation in April 2022, with Rockhopper and Harbour, after the latter decided to exit the Sea Lion project in September 2021, enabling Navitas to come aboard.

Once the project’s field development plan (FDP) was updated to encompass an initial development stage, targeting 312 million barrels of oil (mmbbls), up from 269 mmbbls, with the certified gross 2C resources in the overall North Falkland Basin getting boosted from 712 mmbbls to 791 mmbbls, the FDP for the project was sent for approval.

In addition, the operator handed over an environmental impact statement (EIS) to the Falkland Islands government regarding its proposals to drill oil wells and start offshore production from the Sea Lion field’s Northern development area, entailing Phase 1 and 2, and associated activities, kick-starting a statutory period of consultation, which was slated to end on August 13, 2024.

Following the previous update of NFB independent resource report conducted by Netherland Sewell & Associates (NSAI), known as the ‘October 2024 NSAI independent report,’ undertaken on behalf of the Israeli firm, which sees Sea Lion as “the next big thing,” the company’s partner, Rockhopper Exploration, confirmed an updated NFB independent resource report, called the ‘March 2025 NSAI Independent Report.’

The latest version of the report is said to reflect work carried out to mature the resource base and accelerate later phases of the development program in the build-up to FID, with the overall resources at Sea Lion remaining unchanged. The work carried out enabled a significant number of barrels to be moved from ‘development on hold’ to ‘development pending’ classification.

The new March 2025 NSAI report, which Rockhopper claims not to have reviewed, categorizes the Sea Lion resources into multiple development stages, encapsulating the Northern Area, consisting of three phases, and the Central Area made up of two phases. As the project moves further along the path toward FID, Rockhopper intends to commission its own independent resource evaluation, which will be published later this year.

While the Northern Area phases 1 and 2 will be developed using a redeployed and upgraded FPSO that is expected to be secured upon FID, the Northern Area Phase 3 and the Central Area phases 1 and 2 will require a substantially larger replacement FPSO to be identified and secured.

According to Rockhopper, the development on hold category of 178 MMbbls 2C includes gross resources within Sea Lion and Isobel/Elaine that could be developed under future phases, but for which there is currently no published development plan. Navitas’ target for FID currently remains on the agenda for mid-year 2025.

The 2C contingent resources representing the development pending category of the phased development concept for the Sea Lion field involve 64 wells. The FEED work for an FPSO, which will be anchored to the seabed within a 1,275-meter radius exclusion zone to produce the fluids from the wells, started in November 2024.

Northern Area Phase 1 envisions 11 wells, 6 pre-drilled, and 170 mmbbls; Phase 2 is designed to bring 12 wells and 149 mmbbls, and Phase 3 contains 16 wells and 95 mmbbls. The total capex for all three phases is estimated to reach $4 billion, with a production breakeven of approximately $24 per barrel.

On the other hand, Central Area Phase 1 is made up of 12 wells and 212 mmbbls, as Phase 2 is expected to bring 13 wells and 102 mmbbls. As a result, the total barrels developed in all phases will amount to 730 mmbbls, with Phase 1 and Phase 2 peak production rates being 55,000 bbls/day, increasing up to 150,000 bbls/day once all phases have been developed.

Located approximately 220 kilometers to the north of the Falkland Islands in Block 14/10, the Sea Lion field in the production license areas PL032 and PL004b encompasses the proposed developments of phases 1 and 2.