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Australian oil and gas company Woodside Energy has completed the acquisition of the entire participating interest of oil company FAR in the offshore area in Senegal containing the Woodside-operated Sangomar development. The purchase price for FAR’s stake in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture was $45 million, plus a working capital adjustment of approximately $167 million to reflect the acquisition as of 1 January 2020. The final payment to FAR, after adjustments and remedying FAR’s defaults under the joint operating agreement, was approximately $126 million. Additional payments of up to $55 million are contingent on future commodity prices and the timing of the first oil from the Sangomar project via a Floating Production Storage Offloading (FPSO) vessel to be supplied by MODEC.
The Sangomar development, consisting of the drilling and completion of 23 subsea development wells, will be Senegal’s first offshore oil development targeting the production of circa 231 million barrels of oil resources (P50 gross) via a FPSO. As a result of this acquisition, Woodside’s participating interest in the RSSD joint venture has increased to 82% for the Sangomar exploitation area and 90% for the remaining RSSD evaluation area. Woodside intends to sell down its participating interest in the RSSD joint venture to approximately 40-50% in the second half of 2021. The Sangomar Field Development Phase 1 will comprise a stand-alone FPSO with a production capacity of circa 100,000 barrels per day (bpd), 23 subsea wells and supporting subsea infrastructure.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Alhaji Mele Kyari disclosed that NNPC and its partners in the Oil Mining Lease (OML)130 are set to earn over $760 million from fresh Gas Supply Purchase Agreements and Gas Entitlement Agreement in the Production Sharing Agreement and Production Sharing Contract of OML 130.
The partners in the project include Total Exploration and Production Nigeria, China National Offshore Oil Corporation, South Atlantic Petroleum Nigeria Limited and Prime 130 Limited, with the agreement with its partners representing a positive contribution towards the corporation’s gas commercialization program. Alhaji Kyari said, “We now have a clear line of sight around gas revenue of up to $250 million and also another $510 million that applies to the rest of us”. OML 130 is a Deepwater block located 130 kilometers offshore Niger Delta at water depths of well over 1,000 meters. The block contains the producing Akpo and Egina fields and the Preowei discovery.
The Minister of State for Petroleum Resources, H.E. Chief Timipre Sylva said that the Petroleum Industry Bill (PIB), recently passed by the National Assembly, will be forwarded to the presidency shortly for timely consideration. Minister Sylva, however, noted to stakeholders that the PIB would receive the necessary urgency required for it to become a law. He further mentioned that the terms of the PIB are one of the most favorable in the world for international investment in hydrocarbons and expects investors to come into the sector following its passage.
On July 8, crude oil futures remained slightly lower but near session highs after government data showed U.S. crude inventories fell for a seventh straight week. The U.S. West Texas Intermediate crude futures were up 47 cents at $72.67, while Brent crude futures traded at $73.08 per barrel at 11:45 AM ET (15:45 GMT). The U.S. Energy Information Administration’s weekly report for July 8 showed a drop in crude oil inventories by 6.866 million barrels for the week ending July 2, against analysts’ expectations for a draw of 4.033 million barrels. So far, oil prices have surged nearly 50% in 2021 – attributed to consumption rebound and the curb on fuel output by the Organization of the Petroleum Exporting Countries and allies (OPEC+). OPEC+ is yet to decide on August supply due to the dispute between Saudi Arabia and the United Arab Emirates on export quotas. However, investors are concerned that if the OPEC+ agree on a supply deal, and with the outbreak of the COVID-19 Delta variant in nations, fuel demand recovery will be impacted.