As per the deal, Glencore will market a minimum of 20 million barrels of oil from the Sangomar Field for a period of seven years following production of first oil
FAR signs marketing deal with Glencore for offtake from Sangomar Field. (Credit: Pixabay/C Morrison)
Australia-based FAR has entered into a marketing deal with Glencore Energy (UK) to fully allocate its share of crude oil produced from the Sangomar Field offshore Senegal to the latter.
The parties have signed a binding Memorandum of Understanding (MoU) that allows Glencore to market a minimum of 20 million barrels of oil for a period of seven years following production of first oil.
The MoU, which is subject to the negotiation of final documentation, is expected gives FAR the access to the marketing and offtake resources of Glencore, which is claimed to be among the major marketers of crude oil in the world.
The Australian oil and gas company stated: “FAR will benefit from Glencore’s global network and multi-decades expertise in the oil and gas landscape, including access to Glencore’s unprecedented track record in successfully creating markets for new qualities of crudes, thereby maximising the intrinsic value of the Sangomar barrels.”
The marketing deal is also subject to Glencore remaining a lender to FAR as per an earlier agreement signed between the parties this week. Under the agreement, FAR secured funding of $300m from Macquarie Bank, BNP Paribas, and Glencore for the development of the Sangomar Field.
Each of the lenders had committed to $100m funding for FAR.
Key contractors to proceed with the Sangomar Field development
Earlier this month, Woodside, Cairn Energy, and FAR, the participants in the Sangomar Field signed a final investment decision statement for phase 1 of the project. Following this, the oil field’s operator Woodside has issued the full notice to proceed (FNTP) to the key contractors to begin the Sangomar Field development.
FAR revealed that the partners have placed orders for long lead items for the drilling and related completions. The drilling work at the offshore oil field is planned to begin at the end of the first quarter of 2021.
Diamond Offshore holds the contract for the development drilling. The contract includes an additional evaluation well on the FAN or the SNE North discoveries, prior to the start of the development drilling.
The partners are also said to continue working on plans for development of the gas in the Sangomar Field. A concept select decision is expected to be made by the partners in the third quarter of 2020.