ONGC Videsh signs agreements to acquire FAR stake in Senegal blocks

OVL will acquire 13.6667 per cent participating interest for an upfront consideration of $45 million and contingent payments payable annually

ONGC Videsh (OVL) has signed definitive binding agreements with Australia’s FAR for acquiring 13.6667 per cent participating interest in exploitation area of Sangomar field and 15 per cent participating interest in remaining contract area of Rufisque, Sangomar Offshore and Sangomar Deep Offshore (RSSD) Block in Senegalese offshore.

The acquisition involves (i) an upfront consideration of $45 million with customary adjustments including the opening working capital as of January 2020 and the cash calls paid or to be paid from January 2020 onwards until completion (excluding any default interest paid / payable by FAR for any delay in cash call payments). "This shall be payable upon completion; and (ii) 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," said an OVL statement. The total investment involved including the development cost until the first oil is expected to be around $600 Million.

The completion of the present transaction would mark ONGC Videsh entry in Senegalese offshore in 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 exploration and production portfolio. Woodside Energy (Senegal) BV (Woodside), Capricorn Senegal (Cairns) and Le Société des Pétroles du Sénégal (Petrosen – the national oil company of Senegal) are other partners in the RSSD Block.

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 square kilo meter and is planned to go on production in 2023 under Phase-1 development.

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 shall hold 68.3333 per cent participating interest in Sangomar Field and 75 per cent participating interest in Exploration Area while Petrosen shall hold 18 per cent participating interest in Sangomar Field and 10 per cent participating Interest in Exploration Area of the RSSD Block.