Woodside pre-empts ONGC on Senegal's Sangomar

Australian energy firm Woodside Petroleum has pre-empted Australian independent Far's plans to sell to Indian state-controlled upstream firm ONGC a 13.67pc stake in the 100,000 b/d Sangomar oil field offshore west Africa's Senegal.

Woodside is using its pre-emptive rights as operator and majority shareholder in Sangomar to buy Far's stake for the same $45mn plus various additional payments that ONGC offered. This includes additional payments for Far's share of the capital expenditure on the $4.2bn project from 1 January, including $29.6mn to cover Far's default to the joint venture.

The transaction also includes an entitlement to certain contingent payments capped at $55mn, based on a 45pc share of supplies sold where the price is above $70/bl. Sangomar is targeted to start production in mid-2023. The contingent payments to Far will end either on 31 December 2027 or three years from the first oil been sold, whichever is earlier.

Woodside intends to sell down its stake in Sangomar to 40-50pc sometime next year. Acquiring Far's stake will help to streamline this process, it said. It had increased its stake in Sangomar to 68.33pc by acquiring a 40pc stake from UK independent Cairn Energy for $400mn and will have 82pc once it acquires Far's portion.

Trading in Far shares has been suspended on the Australian Securities Exchange since September because of its financial position. On completion of the deal, Far expects to have around $130mn that it plans to use for its other west Africa offshore interests.

The sale of the minority stake in Sangomar is conditional on the approval of the Senegalese government and is expected to be completed by the end of January 2021. Senegal's state-controlled energy firm Petrosen raised its stake in Sangomar this year to 18pc from 10pc, exercising its right to increase its share after the project was sanctioned in January.

By Jo Clarke

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