Senegal Spat Risks Delaying Oil
Development of three oil-rich blocks offshore Senegal, currently operated by UK Cairn Energy, could be delayed as minority Australian partner FAR has objected to ConocoPhillips' intention to transfer the operatorship of the joint venture (JV) to much larger Australian independent Woodside.
The spat shows how vigorously companies are defending their interests, now that Senegal has become an oil and gas hot exploration spot.
Woodside bought a 35% stake in the three licences offshore Senegal -- Rufisque, Sangomar and Sangomar Deep -- from Conoco last year for $350mn. It was agreed then by Cairn that Conoco would operate the blocks, which include the SNE oil discovery, at the development stage. But FAR is objecting.
Woodside said June 8 that FAR “will not support arrangements for Woodside to undertake development works as development lead of the SNE oil field, offshore Senegal, at this time.” FAR has a 15% interest in the 3 blocks, while Cairn has 40% and state Petrosen 10%.
FAR says it may go to court
FAR responded by saying that there is no JV agreement for this to occur: "The JV has not received any notification that the government of Senegal has approved the transfer of interest to Woodside. FAR’s position in relation to its valuable pre-emptive rights over the sale of ConocoPhillips’ interest in the JV is well documented and remains unresolved," it said, in response to Woodside. FAR said it was prepared to go to court to defend its interests.
Woodside said it does not believe that FAR’s claims have any merit: “Woodside maintains that it has an interest in the production sharing agreement (PSA), has complied with the terms of the PSA and Senegalese law, and has at all times honoured its joint venture obligations,” it said.
Woodside CEO Peter Coleman said that these actions by FAR put at risk the timely development of the SNE oil field in a prospective emerging basin.
Late last month, Woodside stated that its transition to development lead and subsequent operatorship was underway and that the first phase FPSO development is targeting first oil as early as 2021.
“FAR’s actions have the potential to negatively impact the development schedule and the anticipated timeframe for first oil. The extent of the impact is uncertain at this time,” Woodside said.
Two weeks ago Cairn spudded a 10th exploration well on the licences, all previous nine having been oil discoveries.
Elsewhere offshore Senegal, the recent award of an exploration block to Total is contested by much smaller independent African Petroleum.
Shardul Sharma