Russian multinational company, Lukoil, has reached an agreement with a leading independent oil and gas exploration and development company, Cairn Energy, to purchase the company’s assets in Senegal which includes a share of the Sangomar development.

Following this development, an upstream analyst at Data and Analytics company, GlobalData, Conor Ward, expressed his opinions on the significance of the project for Lukoil.

Like many energy companies, Lukoil reported losses in its first-quarter report of 2020 amid historically low oil prices due to an unexpected drop in demand and supply of oil in the global market caused by the COVID-19 pandemic.

This step by Lukoil has shown its belief in the West African energy potential in the Exploration and Production sector. The analyst said the firm is showing its commitment to continue investing in the West African scene and will become one of the major forces in the region in the coming years.

He said Lukoil is expected to grow fivefold from around its current 14,000 barrels per day in 2020 to about 70,000 barrels per day in the coming years. The Sangomar field that is part of the Senegalese assets will add about 20,000 barrels of oil equivalent per day to the company’s portfolio.

He also highlighted that some of Lukoil’s acquisition has faced challenges which have caused delays and a shift in earlier projections. An example is the Bongo Southwest/Aparo field in Nigeria where the Final Investment Decision (FID) which was expected to be concluded in 2020 will have to wait until at least 2021.

Lukoil has not only been making purchases in West Africa alone but has been spreading its tentacles to the Middle East too. The company has purchased a 5% stake in the Ghasha concession which is expected to add not less than 12,000 barrels of oil equivalent per day to the company’s portfolio when it reached the plateau.

In the words of Ward, “News that Lukoil is planning to expand in Western Africa comes as no surprise as the region has seen a flurry of company spending over the last decade – with its acquisition of a stake in major projects such as Ghana’s Pecan field, Nigeria’s Bonga Southwest/Aparo field, Congo’s Marine XII offshore license and Equatorial Guinea’s Fortuna LNG project.”

He added, “The participants of Pecan are still considering a new development concept and the same goes for the Fortuna development, while the Etinde field in Cameroon hangs in doubt. The acquisition of the Sangomar field will really bolster the company’s West African growth plans as it achieved FID in 2020 and the operator Woodside has remained adamant that first production will be seen in 2023 as originally planned.”