Woodside blocked Lukoil from Senegal project due to sanctions, will look for a different partner
MOSCOW. Aug 19 (Interfax) - Australia's Woodside Petroleum exercised its preemptive right to buy Cairn Energy plc's 40% stake in the Rufisque, Sangomar and Sangomar Deep or RSSD project offshore Senegal due to the sanctions against Russia's Lukoil , which wanted to join the project.
Russia's Lukoil is currently on a U.S. list of sanctioned Russian firms in which deep-water oil projects transactions are included.
Africa Oil & Power quoted Peter Coleman, chief executive officer of Woodside, as saying the acquisition would discard "the potential uncertainty of U.S. sanctions applying to the Sangomar Field development." He said the company looked forward to completing the transaction with Cairn and working with all stakeholders, including potential new joint venture partners, to successfully deliver Senegal's first oil project.
The RSSD project is being implemented under a production sharing agreement. Woodside is the project's operator with a 35% stake. Other participants are FAR with 15% and state-owned company Petrosen with 10%.
New partners are set to enter the project throughout the next 12 months as Woodside considers decreasing its Sangomar stake during that period, Africa Oil & Power said. Concurrently, remaining joint-venture partner Far Ltd is looking for a buyer for its 14% stake, as the company has not managed to raise funds to finance its share of the project, it said.
Lukoil said at the end of July that it had concluded an agreement with Cain Energy on the purchase of a 40% stake in RSSD for $300 million in cash. The agreement also provides for potential bonus payment to Cairn Energy up to $100 million after the commencement of production.
But Cairn Energy said on August 17 that Woodside had exercised its right to pre-empt "on the same terms and conditions" as the proposed sale to Lukoil. "In the event that no other JV parties pre-empt prior to the deadline of August 26, 2020 then Woodside will acquire Cairn's entire interest in the project. The transaction remains subject to Government of Sénégal consent and Cairn shareholder approval," Cairn Energy said.
The blocks of the project covering 2,212 sq. km are located on the deepwater shelf of the Republic of Senegal 80 kilometers from the shore at a depth of 800-2,175 meters. The blocks include two discovered fields: Sangomar and FAN.
The final investment decision (FID) on the Sangomar field was made in the beginning of 2020 and development of the field has begun. According to the company's estimates, the recoverable hydrocarbon reserves of the Sangomar field total approximately 500 million boe. There are plans to launch in 2023 with a designed production level of 5 million tonnes of crude oil per year.
The U.S. has decided that deep-water oil projects where sanctioned Russian companies own at least 33% of the equity will be subject to sanctions.
