BP to team with Kosmos on Mauritania, Senegal offshore blocks

BP PLC will invest nearly $1 billion to partner with Kosmos Energy Ltd. for exploration and development of six blocks off West Africa.

BP has agreed to acquire 62% interest including operatorship of Blocks C-6, C-8, C-12, and C-13 offshore Mauritania, and 32.49% effective working interest in Saint-Louis Profond and Cayar Profond blocks offshore Senegal (OGJ Online, May 9, 2016).

Kosmos will maintain 28% and 32.51% effective working interest in the licenses offshore Mauritania and Senegal, respectively, and will continue as exploration operator and drill three exploration wells beginning in 2017.

The combined 33,000 sq km of acreage could contain 50 tcf of gas resource potential and 1 billion bbl of liquids resource potential, according to Kosmos estimates. The area includes Tortue field offshore Mauritania estimated by Kosmos to contain more than 15 tcf of discovered gas resources (OGJ Online, Nov. 12, 2015).

Under the terms of the agreement, Kosmos will receive fixed consideration of $916 million, including $162 million in cash up front; $221 million carry on exploration and appraisal, including a drill stem test on Tortue expected to be completed in 2017; and $533 million maximum carry on development costs until production startup on Tortue, including a front end engineering and design study to be completed in 2017 with the objective of reaching a final investment decision by 2018.

Kosmos also will receive a contingent bonus of up to $2/bbl for up to 1 billion bbl of liquids, structured as a production royalty, subject to a future liquids discovery and oil price.

Bob Dudley, BP chief executive officer, said, “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.”

The new partners plan to process and transport the gas from Tortue at a nearshore LNG facility to reduce development time and improve capital efficiency. The proposed complex could be expanded in phases to accommodate future gas discoveries.

In addition to the existing blocks, the companies have agreed to cooperate in areas of mutual interest in offshore Mauritania, Senegal, and Gambia with Kosmos acting as the exploration operator and BP as the development operator.

Subject to government approvals, the deals are expected to close by first-quarter 2017.

The move follows BP getting 10% interest in Abu Dhabi’s ADCO onshore oil concession (OGJ Online, Dec. 19, 2016). BP last month purchased 10% interest in the supergiant Zohr natural gas field offshore Egypt from operator Eni SPA (OGJ Online, Nov. 28, 2016).

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