Oslo-listed BW Offshore will continue to press ahead with work on its long-stalled Kudu gas development off Namibia, despite recent reports from Windhoek suggesting that the government had shelved the project.

BW Offshore has a 56% operating stake in Kudu, which is one of three upstream assets — the others are Maromba off Brazil and Dussafu in Gabon — set to be incorporated into BW Energy, its 68.6%-owned subsidiary that is due to be listed in Norway next year.

The floater player’s recently installed chief executive Marco Beenen told analysts this week that Kudu “is a project where we have governmental partners and that makes it a bit complex to go at a fast pace of development.”

“We have to make many iterations (on the proposed development) but we will continue to work those issues,” he said during the company’s third quarter results webcast.

His comments came just after Klaus Endresen, BW’s country manager, told a Namibian newspaper the project “is alive and well” and had not been shelved.

Question marks about the project’s future emerged after state-owned NamPower did not include the Kudu gas-to-power scheme in its five-year strategic plan, unveiled in July, saying it will focus instead on developing solar, wind and biomass schemes and continue to import electricity from South Africa.

In a statement issued to New Era newspaper, Endresen said: “We believe in the Kudu field and we have the required resources to develop it. We see the project and our role as the embodiment of the type of investments that President (Hage) Geingob called for at (an) international investment conference in July this year.”

He said the field partners have been examining various alternatives for the use of Kudu’s gas but said the gas-to-power option is still a possibility.

The original project called for gas to be fed via subsea wells (liquids would be offloaded to a floating production vessel) to a new 800-megawatt power plant at Oranjemund, later reduced in capacity to 475 MW.

Last year, BW, NamPower and Namcor said this $2 billion scheme was commercially and technically viable but Endresen said the government failed to provide guarantees.

Kudu holds between 750 billion and 1.3 trillion cubic feet of gas.

Meanwhile, BW reported a net profit of $9.5 million in the third quarter of 2019, down from a $36.5 million profit in the previous three months, on revenues of $267.2 million ($286 million).

BW reported that of its 15-strong fleet of floating production, storage and offloading vessels, one, Abo off Nigeria, secured a contract extension to the end of 2019, while Polvo and Cidade de Sao Vicente in Brazil secured contract extensions to 2020, and Petroleo Nautipa in Gabon secured a contract extension to 2021.

Beenen said that the Cidade de Sao Vicente is expected to secure a further contract extension next year, but cautioned that “it probably may not continue too long after that.”

Discussions are meanwhile under way with Murphy Oil to extend the lease for BW Pioneer in the Gulf of Mexico, while the Umuroa FPSO contract off New Zealand recently ended after the operator Tamarind entered into administration.

Beenen said talks with Murphy are progressing. “We’re discussing a five-year agreement with possible options and the aim is to conclude this before the end of the year (or) the next quarter.”

The Umuroa FPSO will be available for redeployment from 2020 after being demobilised, joining the BW Athena in that category. The latter is targeting potential projects in the North Sea.

Beenen said Umuroa is “a very flexible” turret-moored unit, designed for harsh environments and is in a “good condition.”

In contrast, he said Athena “is a more difficult story because it is a very niche FPSO”.

Production

BW continues talks on Kudu