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CNOOC and Total rethink Uganda Kingfisher in the north light of Yamal

CNOOC and Total consider Kingfisher modular design

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe State-owned China National Offshore Oil Corporation (CNOOC) and its partners, the major Total from France and the independent company Tullow Oil plc (Tullow) from UK, are rethinking the conceptual design for the Kingfisher project in the Uganda Lake Albert gas fields in the light of the modular design experience acquired from the challenging Yamal LNG project currently under construction in the northern Russia Yamal Peninsula.

Formerly called Block-3A, the Kingfisher project has been selected by CNOOC, Total and Tullow for the first phase of $15 billion-plus full field development program in the Albertine Rift Basin including also the Block-1 and the Block-2 in the north and middle respectively of Albert Lake area.

Total_Uganda_Kingfisher_mapIn 2006, Tullow made the first discoveries in Lake Albert and very quickly it appeared that this area could concentrate 60% of Uganda reserves with more than 2 billion barrels of oil equivalent (boe).

At this scale Tullow decided to look for large companies to share interests and signed a Sales and Purchase Agreement (SPA) with Total and CNOOC.

In 2011, Tullow, Total and CNOOC took 33% each of the working interests in Block-1, Block-2 and Block-3A.

In order to also balance the operatorship responsibility between the three partners, Total became the operator in Block-1, Tullow in Block-2 and CNOOC in Block-3A renamed Kingfisher.

In 2012, CNOOC selected the engineering company Petrofac to perform the pre-front end engineering and design (pre-FEED) for Kingfisher.

In December 2013, CNOOC awarded the front end engineering and design to WorleyParsons for Kingfisher, based on a conventional design and construction of the facilities.

As a result of this FEED work, Kingfisher project costs estimate came out around $2 billion capital expenditure to CNOOC, Total and Tullow.

COOEC won Yamal LNG modules contract from Total

In addition to the financial aspects the question to concentrate thousands workers from the region for the construction of the facilities did not get an easy answer in a such sensitive area of Africa.

CNOOC_Kingfisher_Block-3A_Uganda_mapIn parallel to these challenges, Total awarded in July 2014 a $1.6 billion contract to the CNOOC– subsidiary China Offshore Oil Engineering Corporation (COOEC) for the construction of 36 large modules to be shipped and installed in the Yamal Peninsula for its liquefied natural gas (LNG) project in the north of Russia.

This modular concept was imposed in Yamal LNG project because of the extreme conditions of the area, but the lessons learnt from this decision for Total regarding the projects lower cost and simplicity of construction on site appeared to be widely replicable in Uganda for Kingfisher.

CNOOC being Kingfisher operator, if its affiliate COOEC is performing well in Yamal it should do even better for Kingfisher.

In Kingfisher, it happens that two partners, Total and CNOOC, of the three share the same interest to rethink the design of Kingfisher project based now on a modular construction similar to Yamal.

When decision confirmed, CNOOC and  its partners Total and Tullow, may tender again the Kingfisher FEED contract based on this modular concept.

In this scenario CNOOC, Total and Tullow may postpone Kingfisher start up from 2017 to 2019, but in counter part  they will accumulate a valuable experience from Yamal LNG for the full field development of Lake Albert Block-1 and Block-2 at lower costs.

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