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    Lukoil Enters Senegal Block


Lukoil will pay $300mn initially and $100mn when production starts.

by: Joseph Murphy

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Natural Gas & LNG News, Africa, Premium, Corporate, Mergers & Acquisitions, News By Country, Senegal

Lukoil Enters Senegal Block

Russia's Lukoil has acquired a 40% stake in the Rufisque, Sangomar and Sangomar Deep (RSSD) project off Senegal from the UK's Cairn Energy for $300mn in cash, the companies said on July 27.

The RSSD block is 2,212 km2 in size, some 80 km from shore covering waters 800-2,175 metres deep. It contains the Sangomar and Fan oil and gas discoveries.

The production-sharing agreement for RSSD is operated by Woodside Petroleum with 35%, while fellow Australian firm FAR has 15% and Senegalese national company Petrosen has 10%. The group took a final investment decision on Sangomar's development in January.

Lukoil estimates the field's reserves at 500mn barrels of oil equivalent. First oil is expected in 2023 and output is expected to reach 100,000 b/d. The partners also plan to export the field's gas to shore.

Lukoil said entering the project would reinforce its position off West Africa and increase its offshore experience. The Russian firm also took a stake in an offshore Congo-Brazzaville project in September for $800mn. It will have to pay an additional $100mn to Cairn when production at Sangomar commences. 

Cairn described the deal as portfolio management, noting it expected closure in the fourth quarter. The transaction will be backdated to January 1 2020, it said, adding that it intended to return at least $250mn of the proceeds to shareholders.