Australia's FAR to sell Senegalese blocks to India's ONGC in 'bittersweet' deal

London — Oil explorer FAR Limited has agreed to sell its entire stake in its Senegal offshore blocks, which contain the country's maiden oil project -- Sangomar -- to India's ONGC, it said Nov. 11.

FAR's Managing Director Cath Norman admitted that the sale of the Rufisque, Sangomar and Sangomar blocks offshore Senegal is "a bittersweet moment" but that it remained committed to projects in The Gambia and Guinea-Bissau.

ONGC Videsh, the overseas arm of India's ONGC, confirmed in a statement that it had agreed to pay FAR S$45 million for a 13.67% interest in the Sangomar field and a 15% stake in the remaining contract area of the Rufisque, Sangomar Offshore and Sangomar block, along with some more reimbursements.

"The market for financing and selling assets has been weak since the impact of COVID-19 was felt in March of this year," Norman said. "In these circumstances, the offer from ONGC represents the best option available at this time and we trust that our shareholders will vote for this transaction."

A final investment decision on the first phase of Sangomar, targeting 230 million barrels, was taken in January, with first oil expected in 2023.

The field is expected to produce 100,000 b/d at its peak in phase 1. Total recoverable oil resources are estimated at 500 million barrels, with a gas pipeline to shore also envisaged.

Rocky path

The news comes almost four months after London-listed explorer Cairn Energy sold its stakes in its Senegalese oil discoveries to Australian partner Woodside Energy.

The Sangomar project has endured a rocky year like many other deepwater projects.

In June, FAR defaulted on a cash call for the Woodside-operated Sangomar oil project.

At the time FAR said the decision was a strategic move to preserve its cash as it was looking for a buyer for its stake.

The Sangomar project, which would be Senegal's first offshore oil development, has also been facing some delays due to the impact of COVID-19.

Senegal is also awaiting the start-up of the BP-operated Greater Tortue Ahmeyim LNG project, which straddles the Mauritanian border and is initially intended to produce 2.5 million mt/year. First gas had been expected in 2022, but is now thought likely in 2023. Senegal is an emerging oil province that was opened up by the SNE and FAN discoveries drilled in 2014.

Senegal revised its hydrocarbon code in early 2019 as it seeks to grow its nascent petroleum oil and gas sector. Under the new code, stateowned Petrosen has a 10% stake in all contracts, but this can rise to 40% in certain circumstances.