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Cairn to sell Senegal interests to Lukoil
Cairn is planning to sell to Lukoil its entire 40% interest in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) Contract Area, including the Sangomar development, offshore Senegal, for a cash consideration of up to $400mn.
Following completion, the company intends to return at least $250mn to shareholders.
Commenting on the announcement, Conor Ward, Upstream Analyst at GlobalData, says: ‘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 licence offshore in the Republic of Congo, and the Fortuna LNG project in Equatorial Guinea. Lukoil hopes to see major growth from these projects in the next decade as its foothold in Western Africa has potential to grow five-fold from approximately 14,000 b/d in 2020 to approximately 70,000 b/d by the mid-2020s. Sangomar will add an estimated 20,000 boe/d to Lukoil’s portfolio at peak.’
He continues: ‘It is not just West Africa where Lukoil is making acquisitions, but also in the Middle East where the company purchased a 5% stake in the Ghasha concession, which is expected to add a further 12,000 boe/d 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.’