Bumi Armada signs Kraken contract worth $1.4 billion
MALAYSIA -- BumiArmada said that its nominated wholly-owned subsidiary, Armada Kraken has signed a bareboat charter contract with EnQuest Heather Limited, EnQuest ENS Limited,First Oil and Gas Limited, Nautical Petroleum Limited and Nautical Petroleum as field partners, led by EnQuest Heather Limited as field operator on 20 Dec 2013 for a Floating Production, Storage and Offloading Vessel (“FPSO”) to be deployed at the Kraken field locatedin the United Kingdom sector of the North Sea.
Simultaneously Bumi Armada United Kingdom Limited, another wholly-owned subsidiary of Bumi Armada, and EnQuest Heather Limited also signed a reimbursable contract for the operations and maintenance (‘O&M’) of the Kraken FPSO. Both contracts run simultaneously for a fixed period of eight years, valued at $1.4 billion, with options for 17 annual extensions with a significant upside when the options are fully exercised.
CEO of BumiArmada, Mr Hassan Basma said, “The Kraken oil field development is one of the largest new oil fields in the United Kingdom sector of the North Sea, and amongst the largest investment announced for this sector in 2013.
140 MMbbls of heavy oil are expected o be extracted from the Kraken oil field, over a 25 year life. The North Sea has some 20 Bbbls of recoverable heavy oil yet to be explored. We have already commenced work on the project on 27 Sept 2013, following the execution of the previously announced Letter of Interim Agreement (LOIA) and we look forward to working closely with our clients and value chain suppliers to successfully deliver our first North Sea FPSO to the Kraken oil field in 2016. We certainly hope that this would be the first of more projects to come.”
Bumi Armada will be using a recently built ice-class tanker for this FPSO conversion. The FPSO will have a storage capacity of 600,000 bbls. The FPSO will be moored by a buoy turret mooring system with a fluid transfer system designed to 390 bars pressure. A total of 16 risers will be connected to the buoy turret mooring; the turret will be one of the largest of its kind in the world.
The FPSO will also handle a peak fluid rate of 460,000 bpd and 80,000 bpd oil production, 275,000 bpd water injection and 20MMscf gas handling capacities. The FPSO has a total installed power of 62 MW in a four by 15.5 MW configuration. The power plant is equipped with a triple fuel system including direct burning of heavy crude oil. The heavy oil will be produced by means of hydraulic subsea pumps (HSPs) and this type of submersible pumps have high reliability and require less maintenance compared to traditional electric submerged pumps. It is the second such application of its kind in the North Sea after the Captain field.
This project underscores Bumi Armada’s capability to build, own and operate a harsh-environment FPSO under a stringent regulatory regime. Bumi Armada operates in 18 countries worldwide and has a workforce of more than 3,000 spanning 40 nationalities. BumiArmada is currently ranked in the top three FPSO owner-operators by market capitalization and has successfully delivered four FPSOs in Asia and Africa, with our fifth due for Australia soon under a strict safety case regime and highly regulated environment not dissimilar to those existing in the United Kingdom sector of the North Sea.
The contract is expected to contribute positively to the revenue and earnings of Bumi Armada Group for of the financial year ending 31 December 2013 and the financial periods thereafter for the duration of the contracts.