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UK's Ophir defers capex for Fortuna LNG project to 2019

London — UK-based Ophir Energy has opted to defer the start of capital expenditure for its planned 2.2 million mt/year Fortuna floating LNG export facility offshore Equatorial Guinea to 2019, the company said Thursday.

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In a trading update, Ophir said total company capex for 2018 had been reduced by $30 million against previous guidance "predominately with the deferral of Fortuna spend to 2019" -- signalling yet further delays to the project.

The $2 billion Fortuna LNG project had been widely expected to progress to final investment decision as early as 2016, but difficulties in securing financing have seen the decision repeatedly delayed.

Equatorial Guinea's energy minister Gabriel Obiang Lima in late May warned Ophir that time was "running out" for it to reach FID.

Ophir interim CEO Alan Booth said Thursday the company was "especially conscious" that its Fortuna licence expires at the end of 2018.

"However, we remain determined to deliver value both to our shareholders and the government of Equatorial Guinea," Booth -- who replaced long-standing CEO Nick Cooper in May -- said.

The project was dealt another major blow in May when US services giant Schlumberger walked away from its role in the OneLNG venture with Golar LNG, including its participation in Fortuna LNG.

FID TIMING

Ophir said talks continued with potential lenders for Fortuna LNG as it looks to keep the project alive.

"We continue to believe that Fortuna is a high quality asset and we are focused on trying to secure a new partner with the financial strength likely to be required to unlock the project financing," it said.

"We are in active discussions to secure a partner and the status of the financing and timing of FID will become clear in the coming months."

Ophir had hoped to produce first gas in 2022 but that timeline is now likely to slip further.

FIDs on new LNG supply projects have become increasingly scarce following the fall in LNG prices driven by an oversupplied market and expectations of a supply glut persisting well into the 2020s.

Just one new LNG supply project reached FID in 2017 -- Eni's Coral floating LNG project in Mozambique -- while 2018 has seen just one FID with the approval of the third train at Cheniere Energy's Corpus Christi facility.

The long delays come despite the fact that Ophir agreed in August last year with Switzerland-based trading company Gunvor for the trader to be nominated as the preferred buyer for Fortuna LNG offtake, committing to taking the full contract capacity of 2.2 million mt/year on a Brent-linked FOB basis for a 10-year term.

Ophir in March said Gunvor would underwrite the contract capacity of the Gandria FLNG vessel of 2.2 million mt/year. -- Stuart Elliott, Stuart.Elliott@spglobal.com

-- Edited by Jeremy Lovell, jeremy.lovell@spglobal.com