Oil major Shell has awarded a contract extension to the Petrojarl Knarr FPSO owned by Altera Infrastructure, previously known as Teekay Offshore. However, some of the terms of the contract have been changed, including a reduction in day rate.
Altera Infrastructure said on Wednesday that its subsidiary Teekay Knarr had entered into a contract amendment with Shell, as the operator of the Knarr field, that extends the contract for the lease and operation of the Petrojarl Knarr FPSO until at least March 2022.
The vessel has been operating on the Knarr field since March 2015 under a firm duration until March 2021, which included a further fee payable by the operator if the contract was not extended through to 2025 and with additional extension options thereafter.
The Knarr field, located 120 kilometres off Norway, has estimated gross recoverable reserves of around 80 million barrels of oil equivalent with a production life of at least ten years.
Day rate changes
The contract amendment includes a reduction in day rate from March 2021 to March 2022 and the removal of the fee payable by the operator if the contract was not extended, in return for the introduction of an additional production volume and oil price-related tariff.
The amendment also terminates the operator’s purchase option for the vessel and provides for a mutual right to terminate the contract on six months’ notice without payment of penalty, such termination not to be effective before March 2022.
Chris Brett , President Altera Infrastructure FPSO, said: “The contract amendment provides important visibility for the next period of operations and it also enables us to position the vessel for the next re-deployment”.