FPSO operator BW Offshore has inked a deal to recycle one of its floating production, storage and offloading (FPSO) vessels at a yard in India, as part of its strategy to optimise its asset portfolio through divestment or recycling due to a lack of redeployment opportunities for older FPSOs.
BW Offshore reported on Wednesday that it has signed an agreement to recycle the FPSO BW Cidade de São Vicente in compliance with the Hong Kong International Convention at Priya Blue Industries yard in India. The company confirmed that this FPSO was sold for a cash consideration of $12.8 million.
In its presentation containing the results for 3Q 2021, which was published in November 2021, BW Offshore explained that the FPSO BW Cidade de São Vicente had reached its lay-up locations in Oman, and at that point, the firm was evaluating recycling options as this FPSO was one of three candidates for recycling.
The FPSO operator’s latest statement explains that the Indian yard where the vessel was sent is certified to ISO standards and has been issued with a statement of compliance by Class NK in accordance with the IMO Resolution MEPC.210(63) and the Hong Kong International Convention for the safe and environmentally sound recycling of ships.
Furthermore, BW Offshore informed that it has nominated a third party to be on-site at the recycling yard to ensure health, safety and environmental regulations are followed while a Ship Recycling Plan has been prepared and provided by the yard in cooperation with the Gujarat Maritime Board in compliance with regulations. As further incentive for safe operations, BW Offshore will pay a safe recycling bonus upon completion.
Converted by Keppel in 2009, the FPSO BW Cidade de São Vicente had an oil production capacity of 30,000 bbl/d and a storage capacity of 470,000 bbl. It was operated for Petrobras offshore Brazil since its delivery. Its last contract extension from Petrobras was awarded in June 2020 and it expired in October of the same year.
Ahead of releasing its quarterly results in February 2021, BW Offshore warned it would record an impairment to the book value of three FPSOs, amounting to $59.6 million, in the fourth quarter of 2020. The FPSO BW Cidade de São Vicente was one of these FPSOs and its overall impairment was $104.8 million.
This impairment was a reflection of continued uncertainty around redeployment and extension for certain older units in the fleet, which was closely tied to the market volatility and future development of oil prices due to an increased focus on energy transition.
As previously reported, the company explained back in 2021 that it was considering recycling some of the units in lay-up as it was expecting a more challenging market for redeployments of mature FPSOs going forward.
Another one of these FPSOs was Berge Helene, which BW sold for demolition and recycling in April 2021 despite previous plans to use it on a project development located offshore Brazil.
In line with this strategy, BW Offshore last month announced its decision to sell another one of its FPSO vessels as part of its strategy to transition to floating energy infrastructure investments.
The transaction is subject to customary conditions precedent with closing expected late in the first quarter of 2022.
Source: Offshore Energy
