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Shell exercises $1bn cash purchase option for FPSO

Article-Shell exercises $1bn cash purchase option for FPSO

Shell exercises $1bn cash purchase option for FPSO
Oil major Shell has exercised a $1bn cash purchase option for a SBM Offshore majority-owned FPSO vessel for work in the Stones deepwater development in the Gulf of Mexico.

The purchase option for the FPSO Turritella was made through Shell E and P Offshore Services under Shell Offshore.

The FPSO purchase would allow the Shell affiliate to assume operatorship of the Stones development in its entirety, where the project is expected to deliver approximately 50,000 barrels of oil equivalent per day by the end of this year.

The Turritella has a daily production capacity of approximately 60,000 barrels of oil and 15m cubic feet of natural gas.

“Competitive, deepwater oil resources are a growth priority for Shell with global production expected to reach more than 900-thousand barrels of oil equivalent per day by the early 2020s,” Shell stated.

The company selling the FPSO to Shell is a joint venture owned by SBM Offshore with 55% interest, Mitsubishi Corporation with 30% interest and NYK Line with 15% interest.

The FPSO purchase deal is expected to close in early-2018, allowing time for a transition window to ensure a safe and controlled handover of operations, SBM Offshore said.

SBM Offshore added that the net divestment proceeds will primarily be used for project finance redemption and as such will decrease the company’s proportional net debt position.

The Turritella has been on hire since 2 September 2016 and forms an early phase in Shell’s Stones development in the Gulf of Mexico. The Stones development is located in 9,500 feet of water approximately 320 kilometres offshore Louisiana in the Walker Ridge area.

Currently, Shell has three additional Gulf of Mexico deepwater projects under construction – Appomattox, Kaikias, and Coulomb Phase 2 – as well as options for additional subsea tiebacks and Vito, a potential, new hub in the region.

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