A dispute between two Australian energy companies escalated on Thursday, potentially delaying a promising oil project off Senegal which was due to start producing as early as 2021.
A dispute between two Australian energy companies escalated on Thursday, potentially delaying a promising oil project off Senegal which was due to start producing as early as 2021. The deepwater SNE project is being closely watched as it would be the first oil development in the West African nation, in an offshore area that has recently attracted oil giants BP Plc, Total SA and China’s CNOOC Ltd. Woodside Petroleum, Australia’s biggest independent oil and gas producer, bought a 35 percent stake in the project from ConocoPhillips last year and as part of the deal was due to become the operator later this year.
Woodside said on Thursday that minority stakeholder FAR Ltd had advised that it would not support arrangements for Woodside to take over as operator from Britain’s Cairn Energy PLC. FAR contends that it should have had pre-emptive rights over the ConocoPhillips stake, which was sold for what was considered a cheap price of $350 million, and has said the Senegalese government has yet to approve the deal. Woodside said it did not believe that FAR’s claims had any merit.
“These actions by FAR put at risk the timely development of the SNE oil field in a prospective emerging basin,” Woodside Chief Executive Peter Coleman said in the statement. FAR Managing Director Cath Norman, who has kept a low profile over the ownership dispute up to now, said given that Woodside was not operator of the field, it could not claim that development would be delayed. “We are correcting the mistruths that are in the announcement by Woodside stating that the development will be delayed. Cairn is the operator, not Woodside,” Norman told Reuters.
FAR is planning to take the dispute to international arbitration if the pre-emptive rights are not resolved, Norman said, as the SNE project is its core asset, with an estimated resource of 641 million barrels. Woodside has flagged the Senegal development as one of its key near term growth projects. FAR has a 15 percent stake in the project, while Cairn Energy has a 40 percent stake and the state owns the remainder. Spokesmen for Cairn were not immediately available to comment outside office hours.