Date: 12 June 2019
Lukoil Adds Offshore Congo Project to Its African Portfolio
Lukoil, known as one of Russia’s largest oil firms, has invested in yet another African country, acquiring interests in the Marine XII licence offshore in the Republic of Congo for $800 million. This is how much Lukoil paid for buying a 25-percent stake in the hydrocarbon project operated by Italian oil and gas company Eni. Lukoil’s move has marked the beginning of its expansion in the Republic of Congo. During the visit of the Congolese president to Moscow in late May this year, Lukoil signed a letter of intent with Congo’s state-run oil company SNPC.
The 25-percent stake in the licence was purchased from British explorer New Age on the continental shelf of the Republic of Congo. The daily oil output in the Marine XII project amounts to 140,000 barrels. The total worth of the transaction was estimated at $800 million. The Russian oil giant entered the project as Italy’s Eni, which operates the Marine XII venture, did not purchase stakes held by New Age though it had a preemptive right to do so. Lukoil purchased shares at an auction held by Citi Bank and the entire sum was transferred to accounts held by this bank, to which New Age owed large amounts of money. It is noteworthy that New Age is controlled by China-based investment fund Noru. The Congolese oil investment could be eyed as yet another demonstration of ever-closer energy cooperation between Russia and China.
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The Marine XII licence is located on the Congolese continental shelf 20 kilometers offshore and covers 571 square kilometers in water depths of 20–90 meters. The licence comprises five discovered fields to contain resources of 1.3 billion barrels of oil equivalent. Two fields, Nene and Litchendjili, were launched in 2015 and are currently capable of producing 28,000 barrels of oil and gas condensate per day along with 1.7 million cubic meters of gas. The project is operated by Italian oil and gas company Eni, with a 65-percent interest while 25 percent was acquired by Lukoil and the remaining 10 percent is held by Congo’s state-owned Société Nationale des Pétroles du Congo (SNPC).
Lukoil is interested in entering into cooperation with Eni to build LNG plants in the Republic of Congo to use gas from Marine XII. The Russian oil firm intends to develop its activity across the country, as exemplified by the letter of intent signed with Congo’s SNPC in late May this year. The document provides for evaluating the possibility of joint participation in all projects related to geological research, exploration and hydrocarbon extraction in the Republic of Congo. The letter of intent was signed during the visit of the Congelese president Denis Sassou Nguesso to Moscow on May 23–24. Back then, both leaders inked eight deals and other bilateral documents, some of which refers to cooperation in such sector as mass communication or nuclear energy.
Speaking about Lukoil in an official statement, Sassou Nguesso said that “Congolese senior officials are interested in the development of cooperation with Lukoil and will render all-round assistance to the company in its effort to evolve projects in the country.” As informed, Alekperov had met with Denis Sassou Nguesso, the president of the Republic of the Congo. This is Lukoil’s first energy project in the Republic of Congo yet another on African soil; The oil company so far has left its footprint in Cameroon, Nigeria, Ghana, and Egypt. The last of the four countries hosts onshore projects while the three remaining ones are where Russia develops its offshore ventures. Lukoil’s expansion in Africa is in line with the Kremlin’s active policy pursued on the continent. In addition to armaments deal, Russia is investing in the economies of other African countries, mainly through extracting minerals, or is tightening security cooperation. Moscow’s growing appetite for Africa has manifested itself by Vladimir Putin’s meetings with local leaders and will be soon confirmed by the Russia-Africa summit planned for October 2019.
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