Lukoil, Russia’s second-largest oil producer, and New Age have agreed to spend $250million acquiring a 50% share of Bowleven’s Etinde Permit, off the coast of Cameroon.
Lukoil will buy a 37.5% interest, while New Age will increase its existing shareholding by 12.5% to 37.5%, according to a regulatory filing from the Edinburgh-based firm Bowleven, which will retain the remaining 25%.
The Moscow-based oil producer has focused exploration overseas on Africa’s coastline, as Russia limits rights to explore offshore deposits domestically.
Lukoil has yet to find commercial quantities of oil or gas after drilling wells in Sierra Leone, Ghana and the Ivory Coast, leading to $277million in write-offs last year and $162million this year.
“I am not sure the market will welcome the move after the recent write-offs of offshore dry wells,” said Alexei Kokin, an oil and gas analyst at UralSib Financial Corporation in Moscow.
Lukoil is taking risks in West Africa again because it believes in the region’s oil and gas potential, he said.
Lukoil and New Age will pay Bowleven $170million on completion of the deal, a $40million deferred cash payment due at the project’s final investment decision and cover $40million in costs for two appraisal wells, according to the statement.
A subsidiary of New Age will become the operator of the permit, the statement said.