March 30, 2020 / 5:00 AM / 5 months ago

UPDATE 1-Australia's FAR fails to secure debt for Senegal project

(Adds details on settlement with Woodside, project timing)

March 30 (Reuters) - Australia’s FAR Ltd on Monday said it had failed to secure debt to fund its Sangomar project in Senegal, citing adverse market conditions and a plunge in global oil prices amid the coronavirus pandemic.

The company said its board believes the company will not be able to raise the more than $300 million it needs for the project and said it has begun a strategic review on how to shore up the company.

Oil markets have been slammed by demand destruction as travel curbs worldwide due to the coronavirus outbreak have reduced oil consumption by millions of barrels per day. Many oil companies have cut their capital spending by nearly $40 billion for the year.

“In addition to the senior facility, neither the junior nor mezzanine facilities that were being arranged will be able to be completed for the foreseeable future,” the company said.

Earlier in the day, FAR also settled a long-running dispute with Woodside Petroleum, the operator of the project, of its acquisition of a stake in the $4.2 billion operation.

A Woodside spokeswoman on Monday stood by chief executive Peter Coleman’s comments from last Friday that the company does not expect any big delay to Sangomar development plans.

Coleman had said that Woodside would work with its partners to ensure they are able to meet their financial commitments to the project, due to start producing in 2023.

The project is Senegal’s first oil development and key to Woodside’s growth plans over the next seven years. (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Himani Sarkar and Gerry Doyle)

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