As Mercopress have reported over recent months, Premier Oil continue to progress their Front End Engineering and Design (FEED) process for the Sea Lion oil discovery. As a next step in this process, earlier this week Premier Oil plc provided details of their intended approach to both procurement and infrastructure to support the discovery to the north of the Falkland Islands.
In a presentation to the Falkland Islands business community, they laid out an indicative procurement process and timeline. This process will include an initial expression of interest stage, likely followed by formal tendering and negotiation, leading to the award of a number of long-term contracts covering infrastructure and logistics. Eventual contract award will depend very much upon the project being sanctioned by Premier’s Board of Directors. Firming up likely costs and logistical plans is a further step towards eventually seeking such approval.
During their updates, Premier focused in on how they intend to engage with Falkland Islands registered companies. Their approach will follow the broad principles agreed with the Falkland Islands Government in a ‘Local Content’ Code of Practice. This code encourages them to actively facilitate the involvement of Falkland Islands companies but it does not specify an exact target in terms of total or percentage spend locally. Premier are free to award contracts to international companies, as they have been in recent months for design and engineering processes, but they are encouraged to look to use local companies for on-the-ground logistics and infrastructure.
Premier acknowledged during their talk that they had made mistakes during their most recent exploration work in the Falkland Islands in terms of local procurement and are looking to correct this for the Sealion development. They cited brief timelines and a lack of understanding of the Falklands business community as drivers behind mistakes made during exploration. To rectify this they are looking to allow more time for procurement processes this time around and are also breaking down major contracts into smaller segments to allow more Falkland Islands companies, who are mainly SMEs, to tender for them.
The presentation by Premier Oil on Wednesday of this week was followed up with an advert in the Islands weekly local newspaper (The Penguin News) on Friday. The advert requests expressions of interest for a range of services such as accommodation, Base services, helicopter hanger provision and other infrastructure.
From both Premier Oils and the Falkland Islands Governments perspective, this is yet only one more small step towards potential sanction of the project by both parties.