ONGC Videsh to acquire stake in Senegal’s oil field

ONGC Videsh on Wednesday announced that it has signed definitive binding agreements with FAR Senegal RSSD SA for acquiring 13.7 per cent participating interest in the Exploitation Area (Sangomar Field) and 15 per cent participating interest in the Remaining Contract Area (Exploration Area) of Rufisque, Sangomar Offshore and Sangomar Deep Offshore (RSSD) Block, Offshore Senegal.

Woodside Energy (Senegal) BV (Woodside), Capricorn Senegal Limited (Cairns) and Le Société des Pétroles du Sénégal (Petrosen – the national oil company of Senegal) are other partners in the RSSD Block.

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The acquisition by ONGC Videsh is subject to satisfaction of customary conditions precedents including approvals of Senegal regulatory authorities, FAR shareholders’ approval, non-exercise / waiver of pre-emption by joint venture partners and termination of certain third-party agreement. The Sangomar Field, currently under development, is located in the deep waters of Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-Conakry Basin (MSGBC Basin), Offshore Senegal, covering an area of 772 sq km and is planned to go on production in 2023 under Phase-1 development.

The acquisition involves an upfront consideration of $45 million and contingent payments payable annually (capped at $55 million) depending upon the Brent Oil price from First Oil until the earlier of three years from First Oil or December 31, 2027. Total investment involved, including the development cost until the First Oil, is expected to be around $600 million.

Woodside is the operator of the block and has recently exercised its pre-emption rights to acquire the participating interest held by Cairns in the RSSD Block. Post completion of acquisition of Cairns’ stake by Woodside, Woodside will hold 68.3 per cent participating interest in Sangomar Field and 75 per cent participating interest in the Exploration Area while Petrosen will hold 18 per cent participating interest in Sangomar Field and 10 per cent participating Interest in the Exploration Area of the RSSD Block.

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The completion of the present transaction would mark ONGC Videsh’s entry into Senegalese offshore through a significant project under development and is consistent with its strategic objective of adding high-impact exploration and near-term production assets to its existing E&P portfolio, a statement by the company said.

The step to continue foreign acquisitions comes despite recent setbacks from some earlier attempts. ONGC Videsh is said to have completely lost out on the Farzad-B gas field in the Persian Gulf. The development was a significant setback as OVL had discovered this gas field in 2008 and along with its partners offered to invest $ 11 billion for developing it. OVL’s consortium that had Oil India and IndianOil had invested $ 100 million in this project.

OVL also recently exited from Sudan after sustained non-payment of dues since 2011. OVL’s Venezuela investment also fared badly with the crisis hit country stopped payment and dues swelled up to nearly half a billion dollar.

ONGC Videsh is a wholly-owned subsidiary of Oil and Natural Gas Corporation Limited (ONGC), India’s largest international oil and gas E&P company. At present, ONGC Videsh has participation in 37 projects in 17 countries across the globe. ONGC Videsh is currently producing about 250,000 barrels of oil and oil equivalent gas per day and has total oil and gas reserves (2P) of about 587 million tonnes of oil equivalent (MMTOE) as on April 1, 2020.