Shell's Brazilian subsidiary Shell Brasil Petróleo will not be making final investment decision (FID) on its Gato do Mato oil and gas field development offshore Brazil within the next 12 to 24 months.
This is according to FPSO leasing firm BW Offshore which said Monday that Shell had informed it of its decision.
BW Offshore together with Italy's Saipem recently secured an extension to previously awarded limited notice to proceed for early-stage engineering and supplier reservations for the supply of an FPSO for the Gato do Mato project.
This extension was to be valid until February 2023, and was expected to lead to the FPSO lease and operate contract, subject to financing and the project reaching final investment decision (FID).
Had the project reached FID and moved forward, the FPSO lease and operate contract would have had a firm period of 18 years with seven years of options.
In its quarterly results last week, BW Offshore said it was progressing towards contract award with the company's CEO saying that "Gato Do Mato is set to become the second major FPSO project in our portfolio."
However, this will now not happen in the near future and the limited notice to proceed is expected to be terminated
BW Offshore said: "The company expects to receive formal notification terminating the limited notice to proceed (LNTP) in due course. BW Offshore will be reimbursed for costs incurred in line with the agreed terms of the LNTP."
The Gato do Mato oil and gas field is located around 200 km offshore Brazil in the Santos Basin, in water depths of around 2,000 meters.
According to World Energy Reports, one of the most extensive FPSO information databases, the Gato do Mato unit, when approved, is expected to have the capability to produce 90,000 b/d oil + up to 290 mmcf/d gas, have 250,000 b/d water injection capability, and storage for 1.6 million barrels of oil.
"Gas is to be exported via a 100+ km pipeline to the Mexilhao platform or reinjected...The Gato do Mato project will have four oil producer wells, four gas injectors and two water injectors. The field principally holds gas and condensates," World Energy Reports info shows.