In a significant development that has sent ripples through the oil and gas industry, BP has initiated legal action against a subsea contractor, seeking ‘maximum recoverable damages’ for failing to fulfill its contractual obligations on crucial offshore work in Mauritania and Senegal.
The subsea contractor has been replaced at the Tortue Phase 1 project as “failed to perform its contractual obligations,” in accordance with BP’s partner Kosmos Energy.
The controversy came to light in Kosmos Energy’s fourth quarter results, where it also outlined its net capital expenditures for the year to be in the range of $700-$750m.
Kosmos Energy, BP’s partner in the Greater Tortue Ahmeyim Project (GTA), revealed this information in its fourth quarter results and stated that BP, on behalf of the partner group, has initiated the process under its agreement with the original subsea contractor to recover the losses incurred.
Now the partnership will seek to recover the maximum recoverable damages in binding arbitration.
It is estimated that Kosmos’ net share of the recoverable damages to be up to $160m.
This situation not only showcases the complexities involved in offshore energy projects but also highlights the financial and operational risks that companies face.
Kosmos Energy, an American upstream oil company based in Texas, said in its financial results: “Net capital expenditures for 2024 are expected to be approximately $700-$750m, weighted towards the first half of the year as the Ghana drilling campaign concludes and the Winterfell and Tortue projects progress to startup.
“Our 2024 guidance reflects higher than anticipated subsea expenses at Tortue Phase 1 following the replacement of the previous subsea contractor that failed to perform its contractual obligations.”
To remind, in Mauritania and Senegal, a Kosmos-BP partnership is developing the Greater Tortue Ahmeyim Project (GTA), a liquified natural gas project that has the potential to be a source of domestic energy and revenue for both countries.
Located on the maritime border between Mauritania and Senegal, in water depths of up to 2,850m, Kosmos and its partners are developing a gas field with a 30-year production potential.
