Tuesday 29 September 2020
 
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Woodside looks at blocking Lukoil Senegal project

MELBOURNE, July 28, 2020

Australia's Woodside Petroleum is considering whether to block Lukoil from becoming a partner in the $4.2 billion Sangomar oil project off Senegal, after the Russian firm agreed to buy Cairn Energy's Senegal assets.
 
Woodside, 35 per cent owner and operator of the Sangomar project, has a right to match Lukoil's $400 million offer for Cairn's 40 per cent stake in the Rufisque, Sangomar and Sangomar Deep (RSSD) contract area, Reuters reported.
 
"This transaction is subject to joint venture and government approvals," a Woodside spokeswoman said in emailed comments.
 
"Woodside will consider all its options," she said.
 
Lukoil’s acquisition of Senegal assets bolsters the company’s West African expansion plans.
 
“News that Lukoil is looking to expand in Western Africa comes as no surprise as the region has seen a flurry of spending from the company over the last decade – with its acquisition of a stake in major projects such as the Pecan field in Ghana, the Bonga Southwest/Aparo field in Nigeria, the Marine XII license offshore in the Republic of Congo, and the Fortuna LNG project in Equatorial Guinea,” said Conor Ward, Upstream Analyst at GlobalData. 
 
“Lukoil hopes to see major growth from these projects in the next decade as its foothold in Western Africa has potential to grow fivefold from approximately 14,000 barrels per day (bpd) in 2020 to approximately 70,000 bpd by the mid-2020s. Sangomar will add an estimated 20,000 boed to Lukoil’s portfolio at peak. 
 
“The company, like many others during the first half of 2020, has struggled this year - reporting Q1 losses. However, this news suggests that the company has confidence in the exploration and production (E&P) sector and its ambition to expand its West African footprint. However, it is not just West Africa where Lukoil is making acquisitions but also in the Middle East where the company purchased a 5 per cent stake in the Ghasha concession, which is expected to add a further 12,000 boed to the company’s portfolio when it reaches plateau.
 
“Many of the projects that Lukoil has acquired shares in have faced multiple delays such as Bonga Southwest/Aparo where the final investment decision (FID) was expected in 2020, but is now not expected until 2021 at the earliest. The participants of Pecan are still considering a new development concept and the same goes for the Fortuna development, while the Etinde field in Cameroon hangs in doubt. The acquisition of the Sangomar field will really bolster the company’s West African growth plans as it achieved FID in 2020 and the operator Woodside has remained adamant that first production will be seen in 2023 as originally planned.” –Tradearabia News Service



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