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Senegal-Mauritania deal boosts LNG export project

BP and Kosmos Energy plan to give the Greater Tortue development the green light later this year

The signing of an inter-governmental cooperation agreement between Senegal and Mauritania to develop substantial gas resources shared by the two countries has improved the chances that BP and Kosmos will make a positive final investment decision (FID) on the Greater Tortue project in the coming months.

Senegalese president Macky Sall and his Mauritanian counterpart Mohamed Ould Abdel Aziz oversaw the signing of the accord by their energy ministers in the Mauritanian capital Nouakchott on 9 February.

In response, Kosmos said it now expected to take FID on the project before the end of this year, while Bernard Looney, BP's head of Upstream called the pact an "an important milestone". Last month, Géraud Moussarie, BP's head of country for Senegal told Petroleum Economist that BP was on track for FID by the end of 2018 and extolled the efforts of the governments to reach an accord.

BP farmed into Kosmos' acreage in late 2016 and holds stakes of around 60% in the relevant blocks, with Kosmos holding some 30%. The state energy firms of each country hold the rest.

The companies hope to exploit gas reserves lying across the maritime border between the two countries, which could hold more than 20 trillion cubic feet, with the wider region potentially holding as much as 100 trillion cf, according to BP.

Those wider resources include the Yakaar and Teranga finds made by Kosmos in the Cayar Profond block to the south of Greater Tortue in Senegalese waters, which are estimated to hold recoverable resource of 15 trillion cf—potentially enough to support production on their own at a later stage.

Kosmos said the agreement between Senegal and Mauritania allows for development of the Greater Tortue development through cross-border unitisation, with a 50/50 initial split of resources and revenues, with a mechanism for future equity "redeterminations" based on actual production and other technical data.

Exports are envisaged being processed by a floating liquefied natural gas (FLNG) facility on the maritime border, producing around 2.5m tonnes a year initially from around 2021. The use of FLNG neatly sidesteps potential political issues that could have arisen over the location of any land-based LNG plant, with both countries likely to be eager to play host to it. FLNG may also prove faster to develop than onshore, given neither country has experience in developing the necessary infrastructure.

"The innovative near-shore LNG concept being used for Tortue positions the development as one of the lowest cost greenfield LNG projects in the world," according to Kosmos chief executive Andrew Inglis.

FLNG remains in its infancy in terms of practical application, and as such carries the risks of any pioneering technology. While several projects are earmarked to become operational around Africa and elsewhere in the next five years, only one sizeable one is up and running: Petronas' PFLNG Satu project off Sarawak, with a 1-2m t/y capacity, which shipped its first cargo in April 2017.

Shell's Prelude facility—capable of producing 3.6m t/y of LNG as well as 1.3m t/y of condensate and 400,000 t/y of liquefied petroleum gas—is in position over the Browse basin off Western Australia, but isn't due to start operations until later this year.

However, BP and Kosmos are confident that by 2021, when they plan to have their facility operational, FLNG will be turning into solid, mainstream technology.

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