BP in an Acquisition Binge across Africa

By Fred Akanni

Less than a month after it plunked down $375Million to take 10% of the massive Zohr (30Tcf of Gas in place) offshore Egypt, BP is back on the market, snapping up acreage in the Senegal Mauritania basin.

The European giant had earlier signed off on a sales and purchase agreement to lift 100% of the LNG produced by the ENI-operated Coral South Floating LNG facility, which is expected to be installed offshore Mozambique.The agreement covers the purchase of LNG for over 20 years.

Now BP says it is investing nearly $1Billion mostly in the form of a multi-year exploration and development carry to acquire a 62% interest and operatorship of Kosmos Energy operated 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.

At a time of low prices, this is huge.

But while the investment in the Egyptian asset is clearly close to profit, the Senegal/Mauritania buy-in is a significant gamble.

Zohr, which was discovered by ENI in July 2015, is currently being developed for the Egyptian domestic gas market, and the government has been paying regularly, with good prices too, at least $4 per Mscf (thousand standard cubic feet).

Prospects in the Senegal/Mauritania basin have lately described by petroleum geoscientists as ‘The Promise of the Northwest African margin’. Kosmos has encountered what it describes as over 15Tcf of gas off Mauritania. Its next plan is to search for oil in deeper water outboard this discovery. And that is one place where BP comes in, with the cash. BP is also interested in the gas part of the value chain. ”The approximately 33,000 square kilometres of acreage covered by today’s agreements includes the Tortue field, estimated by Kosmos to contain more than 15Tcf of discovered gas resources.

The total acreage, by Kosmos’ estimates, could contain roughly 50Tcf of gas resource potential and in excess of 1Billion barrels of liquids resource potential.

“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, ” BP says in a release. “In order to reduce development time and drive capital efficiency, the partners plan to process and transport the gas from Tortue at a near shore LNG facility. The proposed complex could be expanded in phases to accommodate future gas discoveries.

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 and drill three new exploration wells beginning in 2017.

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