Russia's Lukoil said July 27 that it has reached an agreement with Cairn Energy to take a 40% stake in the Rufisque, Sangomar and Sangomar Deep (RSSD) project offshore Senegal for $300 million.
Lukoil is expanding its presence in Africa at a time when the Russian government has identified the continent as a priority for expanding overseas energy cooperation. Lukoil is playing a key role in this strategy. Late last year it won a license for a gas-rich exploration block off Equatorial Guinea that contains the stalled Fortuna LNG project. It also has stakes in projects in Egypt, Ghana, Nigeria and Cameroon.
The RSSD project includes blocks covering an area of 2,212 square kilometers, located 80 kilometers offshore, at a sea depth of 800-2,175 meters. It includes two discovered fields – Sangomar and FAN.
A final investment decision on the Sangomar field was taken in early 2020 and field development has begun. Recoverable hydrocarbon reserves at the field are estimated at 500 million barrels of oil equivalent. Launch of production is scheduled for 2023, with a designed production volume of 5 million mt of crude oil per year. This is equivalent to around 100,410 b/d.
Development of the RSSD project is being carried out under a production sharing agreement, with Woodside holding a 35% stake and acting as project operator. Other participants are FAR with a 15% stake, and state-owned Petrosen with a 10% stake.
"Entering a project with already explored reserves at an early stage of development is fully in line with our strategy and allows us to reinforce our presence in West Africa. Joining the project with qualified international partners will allow us to gain additional experience in development of offshore fields in the region," Lukoil CEO Vagit Alekperov said in a statement.
The deal is subject to approval by the Senegalese government. It also provides for a potential bonus payment to Cairn Energy of up to $100 million when production begins.
