Oil major BP is to enter the "emerging world-class hydrocarbon basin" offshore Senegal and Mauritania, with three exploration wells planned starting in 2017, leading to a new LNG hub, after agreeing a deal with independent Kosmos Energy.
BP will take a 62% stake in Kosmos Energy's gas prone Mauritanian exploration blocks plus a 32.49% effective working interest in Kosmos’ Senegal exploration blocks - totaling some 33,000sq km. The acreage could contain about 50 Tcf of gas, including the 15 Tcf Tortue deep water gas discovery resource, and more than 1 billion bbl potential, according to Kosmos, says BP, and exploration prospectivity across both countries.
BP will invest nearly US$1 billion mostly in the form of a multi-year exploration and development carry to acquire a 62% interest and operatorship of offshore Blocks C-6, C-8, C-12 and C-13 in Mauritania and an effective 32.49% interest in the Saint-Louis Profond and Cayar Profond blocks in Senegal.
According to BP, in order to reduce development time and drive capital efficiency, the partners plan to process and transport the gas from Tortue at a nearshore LNG facility, with a front end engineering to be completed in 2017, and a final investment decision planned by 2018. The proposed complex could be expanded in phases to accommodate future gas discoveries.
BP's current main focus offshore West Africa is off Angola, where the firm operates the Plutonio and PSVM oil developments. But, BP has past history with Kosmos, having farmed into the independent's Moroccan offshore acreage in 2013. Kosmos, likewise, has links with BP - it's CEO Andy Inglis was former head of exploration for BP. He left BP in 2010, shortly after the Macondo disaster in the US Gulf of Mexico, working for Petrofac before joining Kosmos.
BP has also been investing in gas, with the acquisition of a stake in Eni's huge Zohr gas development offshore Egypt.
Current BP CEO Bob Dudley said of today's deal with Kosmos: “BP’s entry into Mauritania and Senegal represents an exciting strategic opportunity to work with Kosmos Energy in an emerging world-class hydrocarbon basin. We believe our expertise in integrating the gas value chain, together with a talented exploration partner in Kosmos, along with the support of the Mauritanian and Senegalese governments brings together all the elements needed to create a new LNG hub in Africa.”
Under the terms of the agreements, BP and Kosmos have also agreed that Kosmos will remain the technical operator for the exploration phase of the project, which includes drilling the three new exploration wells, beginning in 2017.
In addition to the existing blocks, the companies have agreed to cooperate in areas of mutual interest in offshore Mauritania, Senegal and The Gambia with Kosmos acting as the exploration operator and BP as the development operator.
Kosmos will receive fixed consideration of $916 million, including $162 million up front, $221 million carry on exploration and appraisal, including a drill stem test (DST) on Tortue expected to be completed in 2017, and $533 million maximum carry on development costs until first gas production on the Tortue project, including the front end engineering and design study.
Kosmos will also receive a contingent bonus of up to $2 per barrel, for up to 1 billion barrels of liquids, structured as a production royalty, subject to a future liquids discovery and oil price.
Subject to government approvals, the agreements are expected to close by the first quarter of 2017.