London-listed Energean Oil & Gas has warned of possible delays to its Karish gas field development off Israel due to potential impacts from the outbreak of the deadly novel coronavirus in China.
Energean, however, still expects the Karish project to remain on track to deliver first gas in the first half of 2021, it said.
The company’s floating production, storage and offloading vessel’s hull that will serve Karish is currently being built in Liuheng Island in China.
The Energean Power FPSO hull is due to float out from Chinese yard Cosco Shipping Heavy Industry in Zhoushan, China, and travel to Sembcorp Marine’s Admiralty Yard in Singapore, where the topsides are to be installed under a contract that the Singaporean fabricator was awarded by Energean's main project contractor TechnipFMC.
The sailaway from Singapore is seen in late 2020.
However, many Chinese offshore yards have halted or slowed fabrication activities as efforts to contain the deadly virus have kept workers and engineers at home, interrupting progress on offshore units destined for large oil and gas projects around the world.
Energean said on Thursday: “In order to prevent the spread of the virus, several countries, including China, have issued emergency travel and transportation restrictions, which have had an immediate impact on the availability of labour and resources in affected areas, including Liuheng Island.
“Energean has received a notice under its engineering, procurement, construction, installation and commissioning contract with TechnipFMC in relation to the travel restriction constituting a force majeure event, potentially entitling TechnipFMC to claim an extension of time under the EPCIC contract.
“Energean has, in turn, issued corresponding notices to its buyers of Karish gas and other relevant counterparties,” the company said.
Energean added: “The rapidly evolving nature of these circumstances is such that it is impossible, at this stage, to determine the overall impact, if any, on Energean’s project timeline.
“However, work is still progressing well in the Chinese yard with approximately 550 staff on site, and Energean is working actively with TechnipFMC to ensure that all appropriate measure are being taken to avoid or mitigate any delay.
“Based on the information available at this stage, Energean still expects that the Karish project remains on track to deliver first gas in the first half of 2021,” the company said.
China has become the world's top fabricator of FPSOs. Energean's FPSO will be installed in 1700 metres of water offshore Israel. It will be able to store 800,000 barrels of liquids and will have ultimate capability to handle up to 8 billion cubic metres of gas per year, which equates to about 800 million cubic feet per day.
Energean plans to use the floater to develop 2.4 Trillion cubic feet of natural gas from Karish and neighboring Tanin gas field.
Story updated to clarify that, for now, the Karish project remains on track to deliver first gas in the first half of 2021.
