FAR announces it will not exercise buy option on Cairn’s stake in Senegal
Perth-based FAR announced it will not pre-empt the transaction or object the transfer of Cairn Energy’s working interest in the Rufisque Offshore, Sangomar Offshore, Sangomar Deep Offshore (RSSD) area.
The RSSD area comprises the $4.2 billion Sangomar oil and gas field offshore Senegal in which Woodside, Cairn Energy, FAR Ltd and state-owned Petrosen are working partners. In July, Cairn Energy announced an agreement for the sale of its 40% and majority ownership to Russia’s Lukoil for $300 million. Shortly after the announcement, field operator Woodside announced it would exercise its pre-emptive rights and matched Lukoil’s offer, thus blocking the Russian company’s entrance into the project.
Earlier this year, Sangomar partners took a $4.2 billion final investment decision, thus starting field development works. In the meantime, FAR Ltd announced that it was looking for a buyer for a part or the full of its 14% stake in the project, as it found itself cash-strapped due to being hit by the COVID-19 pandemic and subsequent oil price fluctuations.
“It is pleasing to see the operator, Woodside, and Petrosen showing their support for the Sangomar Field development by increasing their working interest in the project. Unfortunately, due to the COVID crisis and related rout in oil price, FAR continues to pursue a sale of all or part of FAR’s stake in lieu of concluding financing for the development. The Cairn sale is a sign that there is international appetite for this world-class project, even during challenging times,” says Catherine Norman, chief executive officer of FAR.
Senegal’s state hydrocarbon company Petrosen announced its decision to increase its stake in the project from 10% to 18% earlier this month. Following these decisions, the current ownership distribution in the Sangomar field is as follows: Woodside is the operator and holds 68.33%, FAR Ltd has 13.67% while Petrosen has the remaining 18%. Woodside’s acquisition of Cairn’s interest is pending, subject to the State of Senegal’s approval.
In the remaining RSSD area, Woodside has 75%, Far Ltd has 15% and Petrosen owns 10%. The Sangomar field is expected to produce first oil in 2023, after suffering short delays due to the COVID-19 pandemic. Senegal’s other major hydrocarbon project, the Grand Tortue Ahmeyim gas field, is also expected to come online in 2023.