Woodside managing director Don Voelte told a presentation in Houston on Thursday night that development drilling costs on the project had blown out and there was a potential $80 million cost overrun.
More development wells were needed than had been expected. But Voelte said this was not uncommon in a wildcat area where little had been previously known about the region's geology.
In the North West Shelf region, which Woodside knew intimately, well costs were relatively fixed as it had drilled there so many times and knew the geology, so there were no surprises, according to Voelte.
“There is no precedent in that part of the world because no one has drilled there and every time we drill we are faced with new surprises,” he was reported as saying.
The cost overrun could amount to as much as 10% of the $821 million budget but Voelte said the production timetable would not be affected and the partners still expected first production next year.
A Woodside spokesman later said the cost increase would be immaterial. Hardman Resources was reported as saying the cost blowout was not unusual and its existing financial arrangements had the capacity to cover the increased funding required for its 19% share.
The FPSO due to be positioned on the development, Berge Helene, was more than three-quarters finished, according to Woodside, with the overall project almost 70% complete.
Chinguetti is expected to produce more than 75,000 barrels per day.
Interests are Woodside 37%, Hardman 19%, ROC Oil 3.3%, BG Group 10%, Mauritanian government 12%, Premier Group 8%.
