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China’s CNOOC has struck a partnership deal with smaller Australian exploration company FAR for joint operations off the coasts of Senegal and Gambia, where the Australian company already has a presence.
In Senegal, FAR is working with larger players including Woodside Petroleum and Cairn Energy, and in Gambia, it just acquired an 80-percent interest in several offshore blocks. The company’s managing director commented that the CNOOC deal will give FAR the means to continue with its acquisition drive in West Africa.
For CNOOC, the deal is part of an international expansion prompted by depleting fields at home that have shrunk reserves and output. West Africa seems to be a special focus for the company: earlier this week, it announced the acquisition of a 65-percent farm-in stake in an offshore block in the joint development zone of Senegal and Guinea-Bisau.
Last year, the three biggest Chinese state oil companies – PetroChina, Sinopec and CNOOC – reported a combined drop in reserves of 1.8 billion barrels. This is uncomfortable for the world’s largest importer of crude, so the three, despite weak financial results for 2016, have all announces increased spending plans for this year.
CNOOC alone intends to splash around $10 billion this year, thanks to its good cash flow position – it doubled last year, despite a 93-percent drop in profits to $92.5 million. This year, CNOOC plans to start work on five new projects, the company said at the release of its 2016 results and combine new drilling with acquisitions to boost its reserves and production, which slid down 3.8 percent last year.
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The West African coast has been attracting more attention lately. It is considered a frontier region with good oil and gas prospects. FAR alone has so far made eight successful discoveries off the coast of Senegal, and estimates available crude oil reserves in the basin at over 1.5 billion barrels. While no oil has been found so far in Gambia, its proximity to the Senegalese deposits is reason enough to believe it may hold substantial reserves of oil and gas.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.