On March 12th 2013, Talisman Energy (operator of the Yme field) and SBM Offshore (owner of the MOPU - Mobile Offshore Production Unit) announced that a settlement had been reached to remove the defective platform from the Yme field.
On March 12th 2013, Talisman Energy (operator of the Yme field) and SBM Offshore (owner of the MOPU - Mobile Offshore Production Unit) announced that a settlement had been reached to remove the defective platform from the Yme field. For LOTOS E&P Norge, the initiator and one of the driving forces behind the settlement as well as holder of a 20% interest in the licence, such an outcome means the end of negotiations and the long-anticipated return to technical work leading to the ultimate launch of production or sale of the working interest, as a right step towards recovering all funds invested in the project. The investment will be partially recovered thanks to the tax shield applicable to operations on the Norwegian shelf.
SBM Offshore has made a settlement payment of USD 470m to the consortium members. Talisman Energy, acting on behalf of the licence holders, undertook to make all the necessary preparations and remove the MOPU from the field. SBM Offshore, on the other hand, will be responsible for transporting the facility to port and its ultimate scrapping. At the same time, ownership of the in situ subsea infrastructure supplied by SBM Offshore (tank, caisson, etc.) will be transferred to the consortium members. Each party will bear the cost of the scope of work agreed as part of the settlement.
The settlement has been approved by all partners in the Yme licence, including LOTOS E&P Norge. Total crude oil reserves attributable to LOTOS E&P Norge’s interest amount to 12.95 million barrels. Based on the average annual prices from 2012, the reserves are worth approx. USD 1.45bn, i.e. PLN 4.6bn. Following the settlement, LOTOS will be able to pursue an alternative development concept for the Yme field or sell its interest in the licence.
The negotiations between the parties started in June 2012 in Gdańsk, on the initiative of Grupa LOTOS. The settlement was reached thanks to positive cooperation and strong commitment of all licence partners, actions initiated by Grupa LOTOS managers responsible for the project, as well as the Company’s legal and financial advisers.
As regards plans of further expansion on the Norwegian Continental Shelf, this year LOTOS intends to acquire interests in production licences, which would activate the tax shield and allow it recover the remaining capital invested in Yme.
LOTOS is the second largest producer of hydrocarbons in Poland, and the only Polish operator extracting crude oil and natural gas from offshore deposits on the Baltic Sea. Besides Poland, the Company operates in Norway and Lithuania, where - through LOTOS Geonafta - it is the leading producer of crude oil. Total oil resources assigned to licenses managed by LOTOS amount to more than 51 million barrels.
Development of the upstream segment is viewed by LOTOS as its strategic priority. By achieving this objective, the Company will solidify its market position and increase shareholder value, while enhancing Poland’s energy security.
Domestic upstream projects are executed by LOTOS mainly in partnership with PGNiG and CalEnergy.
Communication Office, Grupa LOTOS S.A., ul. Elbląska 135, 80-718 Gdańsk, Poland, tel. (+48) 58 308 87 31, (+48) 58 308 83 88, e-mail: email@example.com