Costs on Eni’s Goliat field off Norway have spiralled to Nkr45 billion ($7.5 billion) amid fabrication delays on its floating production, storage and offloading vessel, with sailaway of the unit from a South Korean yard now postponed to early 2015.
The Italian operator confirmed on Friday the cylindrical-design FPSO, which was due to be delivered from Hyundai Heavy Industries next month, will instead be loaded out of the yard with giant vessel Dockwise Vanguard in the next available transport window.
Start-up of the first oilfield in Norway’s sector of the Barents is now targeted for the middle of 2015, compared with a previous schedule of the end of this year, with Eni saying “a fast ramp-up to steady production is expected”.
The company also revealed project costs have now risen by 50% compared with the original budget estimate cited in the field development plan of Nkr30 billion, having earlier increased by around 25% to Nkr38.5 billion.
The decision to delay sailaway of the vessel was taken by Eni and licence partner Statoil at a meeting on Friday amid increasing doubts over the delivery schedule due to the reportedly huge remaining workload on the FPSO.
Eni said the partners had determined the conditions needed for sailaway by the end of June and for final commissioning offshore in the Barents “were not in place”.
The operator stated that fabrication work on the vessel is at “an advanced stage”, with the topsides nearing mechanical completion and commissioning work ongoing while drilling, installation and subsea work is progressing in parallel in Norway.
“The licence remains fully satisfied with the quality of construction received from Hyundai,” Eni said.
The company blamed the budget increase on high supplier costs fuelled by industry demand, implying such costs were not as high when it submitted the Goliat development plan in 2009 as the oil price was lower and there was therefore less offshore activity.
Fabrication work on the Sevan Marine-designed floater has already been delayed by over a year due to engineering changes on the FPSO as well as higher equipment prices and longer lead times on deliveries, causing delays and cost overruns.
Eni insisted the cost hike was “in line with the industry trend”, adding: “Project economics are robust, as the deferral of production volumes has a limited impact on profitability at the current price scenario.”
The company holds a 65% operating stake in the project, with Statoil on 35%.