Russian independent oil and gas major, Lukoil, announced yesterday that it has reached an agreement with Cairn Energy for 40% of its stake in the Rufisque, Sangomar and Sangomar Deep (RSSD) licenses.

The license has already uncovered two oil and gas fields namely FAN and Sangomar. While FAN is currently not being developed as it is yet to prove that it is commercially viable, the Sangomar field which is the country’s first offshore field is currently being developed and is set to produce its first oil in 2023.

Lukoil will pay $300 million to the Scottish firm with a potential bonus of about $100 million once production commences. The Russian firm will also pay for all the costs incurred since the first of January this year as the Final Investment Decision (FID) was taken in January. The field projected to have the potential of about 500 million barrels of oil.

Cairn Energy said it will be paying not less than $250 million to its shareholders via a special dividend. The Chief Executive Officer of Cairn Energy, Simon Thomson said: “The planned special dividend from the sale of the Sangomar asset reflects Cairn’s long-standing strict capital allocation strategy of active portfolio management and returning cash to shareholders.”

The President of Lukol, Vagit Alekperov said acquiring a project “with already explored reserves at early stage of their development is fully in line with our strategy and allows us [to reinforce] our presence in West Africa. Joining the project with qualified international partners will allow us to gain additional experience in development of offshore fields in the region.”

The government’s approval is awaited for the final part of the deal to be completed but both parties are hopeful for completion by the fourth quarter of the year.

Other operators in the area are Perth-based Woodside with a 35% stake, Australian Independent Exploration company FAR with a 15% stake and Senegal state-owned Petrosen with a 10% stake.