Woodside vetoes Lukoil entry into Senegal oil
Angela Macdonald-SmithSenior resources writer
Aug 17, 2020 – 5.22pm
Woodside Petroleum will pay up to $US400 million ($557million) to prevent Russian giant Lukoil from buying into its Senegal oilproject, deciding to exercise its right to acquire the 40 per cent stakeitself.
Newsof the deal comes just days after chief executive Peter Colemanflagged the oil and gas producer was "primed" to take advantage of M&A opportunities arising in the sector, and suggested the Senegal transaction was in its sights.
Woodside's Sangomar oil project in Senegal is due tostart production in 2023.
Woodsidewill pay $US300 million upfront, plus a further payment of up to $US100 milliondepending on oil prices and the timing of the start-up of production.
TheSangomar project, which Woodside is the operator of, is still in the earlystages of construction, with start-up only due in 2023.
MrColeman said on Monday that Woodside's strong balance sheet allowed it to takeadvantage of the opportunity to take a bigger stake in Sangomar, which wastriggered by venture partner Cairn Energy'sagreement late last month to sell out to Lukoil.
Analysts suggested Woodside would exercise its right topre-empt the purchase by Lukoil, which is the subject of US economic sanctions.
MrColeman said on Monday the deal protects shareholders' interests by removingthe potential uncertainty of US sanctions applying to the Sangomar project.
Butit will increase Woodside's equity interest in Sangomar to about 68 per cent,higher than it is expected to want to retain.
Woodsidesuggested it would look to sell down its stake to potentially bring in newjoint venture partners.
"Welook forward to completing the transaction with Cairn and working with allstakeholders, including potential new joint venture partners, to successfullydeliver Senegal’s first oil project,” Mr Coleman said,
JuniorSangomar partner FAR Ltd is also looking to sell all or part of its 15 per centstake after falling into default on itscapital commitments to the project after the oil price slump in March.
Angela Macdonald-Smith writeson the resources industry with a focus on energy, including gas, oil,electricity and renewables. Connect with Angela on Twitter. Email Angela at amacdonald-smith@copyright link
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