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Acquisition of Senegal assets bolsters Lukoil’s West African expansion plans

Acquisition of Senegal assets bolsters Lukoil’s West African expansion plans

Moscow, July 29 - Neftegaz.RU. Following the news that Lukoil has reached an agreement with Cairn to acquire their Senegalese assets, including a share of the Sangomar development; Conor Ward, Upstream Analyst at GlobalData, a leading data and analytics company, offers his view on the deal:

“News that Lukoil is looking to expand in Western Africa comes as no surprise as the region has seen a flurry of spending from the company over the last decade – with its acquisition of a stake in major projects such as the Pecan field in Ghana, the Bonga Southwest/Aparo field in Nigeria, the Marine XII license offshore in Congo, and the Fortuna LNG project in Equatorial Guinea.

“Lukoil hopes to see major growth from these projects in the next decade as its foothold in Western Africa has potential to grow fivefold from approximately 14,000 bd in 2020 to approximately 70,000 bd by the mid-2020s. Sangomar will add an estimated 20,000 boed to Lukoil’s portfolio at peak.

“The company, like many others during the 1st half of 2020, has struggled this year - reporting Q1 losses. However, this news suggests that the company has confidence in the exploration and production (E&P) sector and its ambition to expand its West African footprint. However, it is not just West Africa where Lukoil is making acquisitions but also in the Middle East where the company purchased a 5% stake in the Ghasha concession, which is expected to add a further 12,000 boed to the company’s portfolio when it reaches plateau.

“Many of the projects that Lukoil has acquired shares in have faced multiple delays such as Bonga Southwest/Aparo where the final investment decision (FID) was expected in 2020, but is now not expected until 2021 at the earliest. The participants of Pecan are still considering a new development concept and the same goes for the Fortuna development, while the Etinde field in Cameroon hangs in doubt. The acquisition of the Sangomar field will really bolster the company’s West African growth plans as it achieved FID in 2020 and the operator Woodside has remained adamant that 1st production will be seen in 2023 as originally planned.”

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