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Woodside has informed Russia’s Lukoil that it would be exercising its right to pre-empt the sale of a stake in a deepwater oil project offshore Senegal to the Russian oil firm, the Australian company said on Monday.
Lukoil was vying to buy the entire stake of Capricorn Senegal Limited (Cairn) in the Rufisque Offshore, Sangomar Offshore, and Sangomar Deep Offshore (RSSD) joint venture.
But Woodside, operator of the project, had the right to pre-empt the sale, which it did.
The Australian company will be buying Cairn’s interest in the deepwater joint venture for US$400 million, including an upfront purchase price of US$300 million and contingent payments of up to US$100 million linked to commodity prices and the timing of first oil.
The acquisition—which is pending Government of Senegal’s approval, Cairn Energy shareholder approval, and the closing of other customary conditions—will boost Woodside’s equity interest in the joint venture to around 68 percent. Woodside will remain the operator.
The acquisition “represents an opportunity for Woodside to deepen its interest in a well understood, world-class asset with near-term production, while also protecting shareholder interests by removing the potential uncertainty of US sanctions applying to the Sangomar Field Development,” Woodside CEO Peter Coleman said.
Lukoil is on a U.S. list of Russian oil firms that could be sanctioned over deepwater oil development.
Woodside could consider over the next 12 months reducing its equity interest in Sangomar, the Australian company said, noting that the development targets first oil in 2023.
“We look forward to completing the transaction with Cairn and working with all stakeholders, including potential new joint venture partners, to successfully deliver Senegal’s first oil project,” Coleman said.
Last week, Woodside said it was looking for acquisition opportunities despite plunging into a loss during the first half of the year.
“We’re clearly scanning the landscape very closely looking for opportunities,” Coleman on the conference call for the first-half results.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com