SBM Offshore bankrolling construction of Guyana-bound FPSO with $1.5 billion loan

Netherlands-based SBM Offshore, a provider of the design, construction, installation, and operation of offshore floating facilities, has secured $1.5 billion with a consortium of 16 international financial institutions to cover the construction costs for a floating production, storage, and offloading (FPSO) vessel destined for the Stabroek block off the coast of Guyana, where it will be deployed on a deepwater oil development, which ExxonMobil, a U.S.-based energy giant, operates.

While confirming the completion of the project financing for the FPSO Jaguar, SBM Offshore explained its expectation to draw the loan in a phased manner over the construction period of the unit, as the loan is perceived to be in line with the duration of the construction phase.

Douglas Wood, CFO of SBM Offshore, commented: “I am proud of our teams which have successfully secured the project financing of FPSO Jaguar, the Company’s first project under the sale and operate model.

“We are demonstrating once again the value of our unique lifecycle offering not only from an execution and operation standpoint but also in our ability to continue to provide material financing solutions for our clients. We appreciate the continued support from the 16 financial institutions.”

After ExxonMobil made a final investment decision (FID) to develop the Whiptail oil development, which is the U.S. player’s sixth project in Guyana’s Stabroek block, the Netherlands-based firm won the front end engineering and design (FEED) work for the FPSO Jaguar, which will work on this Guyanese project. With an expected field life of at least twenty years, the project is scheduled to be online in 2027.

SBM Offshore will operate the vessel for ten years under the operations and maintenance enabling agreement signed in 2023. The completion of project financing comes shortly after a steel strike ceremony was held for the FPSO Jaguar at Guyana Shore Base Incorporated (GYSBI) on November 12, kickstarting the production of over 300 metric tons of fabricated fixtures for the Stabroek block-bound vessel.

The FPSO’s design is based on SBM Offshore’s Fast4Ward program that incorporates the Dutch player’s seventh new build, multi-purpose floater hull combined with several standardized topsides modules. Designed to produce 250,000 barrels of oil per day, the FPSO will have an associated gas treatment capacity of 540 million cubic feet a day and a water injection capacity of 300,000 barrels per day.

The unit will be spread moored in a water depth of about 1,630 meters and capable of storing around 2 million barrels of crude oil. The Whiptail project will develop the Whiptail, Pinktail, and Tilapia fields, along with potential additional resources, should they be feasible and economically viable. 

Since the project is situated in a water depth of approximately 2,000 meters, the development concept encompasses drilling operations via drillships to produce oil from around 40 to 65 production and injection wells.

ExxonMobil Guyana, an affiliate of ExxonMobil, is the operator and holds a 45% interest in the Stabroek block, with Hess Guyana Exploration (30%) and CNOOC Petroleum Guyana (25%) as its partners. Since Hess is in the process of merging with Chevron, the latter may become ExxonMobil’s new partner next year.

Hess and Chevron passed the Federal Trade Commission (FTC) antitrust review, however, the former’s Chief Executive Officer (CEO) was prohibited from joining the U.S. oil major’s board on the grounds of his previous communications with global competitors such as the OPEC cartel.

The completion of the merger remains subject to the merger agreement’s closing conditions, including the satisfactory resolution of ongoing arbitration proceedings, which ExxonMobil and CNOOC decided to file before the International Chamber of Commerce.

This arbitration revolves around preemptive rights in the Stabroek block joint operating agreement since the duo is convinced they have a right to a first refusal over any sale of Hess’ 30% interest in the oil-rich offshore block in Guyana.

Meanwhile, SBM Offshore is preparing three FPSOs to begin work next year. While two will go to oil fields offshore Brazil, one will be deployed at one of ExxonMobil’s projects under development offshore Guyana.

The U.S. oil major also notified the Dutch FPSO operator of its intention to buy another unit working at the Stabroek block following the purchase of the FPSO Prosperity, which came a year after the firm paid around $1.26 billion for the FPSO Liza Unity.