Page 7 - AfrOil Week 13 2020

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Pandemic stymies agreement
on financing for Sangomar project
SENEGAL
THE coronavirus (COVID-19) outbreak is hin- dering efforts to secure financing for the devel- opment of the Sangomar block offshore Senegal.
Australia’s FAR, a minority shareholder in the project, said on March 30 that it could not proceed with plans to borrow $300mn to finance its $492mn share of costs at Sangomar. The company had reported in January that it had struck an agreement with BNP Paribas (France), Glencore (UK-Switzerland) and Mac- quarie Bank Ltd (Australia).
At the time, the company said that each bank was willing to contribute $100mn to the sen- ior secured reserve-based credit facility. Now, though, the lenders are reluctant to proceed.
“The COVID-19 pandemic combined with the precipitous fall in Brent oil price by over 60% since January 2020 has adversely impacted global financial markets, including the global availability of credit,” FAR explained in a state- ment. “Consequently, the company’s ability to close the Sangomar project debt arrangements that were ongoing during this time has been compromised such that the lead banks to the senior facility have now confirmed that they cannot complete the syndication in the current environment.”
The Australian company did not comment further on the loan agreement, but it did say it was working with the other shareholders in the Sangomar block “to explore and evaluate all options to preserve and enhance the value of this world-class development.”
FAR had said in a separate statement on March 25 that this process would include a review of the budget for the project. This review “will include how the costs can be reduced, expenditure delayed or both and any impact on the timeline to first oil,” it noted.
The earlier statement also quoted Cath Nor- man, FAR’s managing director, as saying that the company and its partners were “working to better understand the impact on the Sangomar
developmentoftheCOVID-19virus.”TheSen- egalese government recently closed the coun- try’s borders in a bid to rein in the outbreak.
Both Woodside and FAR are members of RSSD, the joint venture set up to develop San- gomar. The group also includes PetroSen, the national oil company (NOC) of Senegal, and Cairn Energy, a UK firm with an Australian subsidiary. Equity in the project is divided between Woodside, the operator, with 35%; Cairn Energy, with 40%; FAR, with 15%, and PetroSen, with 10%.
The Sangomar block encompasses three sep- arate fields – Rufisque, Sangomar Offshore and Sangomar Deep Offshore – that give the RSSD joint venture its name. The partners discovered oil there in 2014 and have determined that the block contains an estimated 645mn barrels of oil equivalent (boe) in recoverable reserves. This figure includes 485mn barrels of crude oil and 160mn boe of natural gas.
Woodside and its partners made a final investment decision (FID) on the Sangomar project earlier this year. Shortly afterwards, Woodside instructed its contractors to move forward with drilling, installation and subsea construction work at the block. ™
The Sangomar block includes three fields (Image: FAR)
Liberia’s Conex buys assets from Total
LIBERIA FRANCE’S Total has arranged to sell its petro- leum product marketing operations and assets in Liberia and Sierra Leone to Conex Oil & Gas
Holdings, a Liberian-owned company.
Conex revealed last week that the French
major had accepted its offer for Total Liberia and Total Sierra Leone.
The parties have been in negotiations for about a year, since the Liberian holding com- pany first made an offer.
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Week 13 01•April•2020 w w w . N E W S B A S E . c o m
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