10 September 2017, Sweetcrude, Lagos — Lekoil and its partner, Optimum are currently having a row over Oil Prospecting Lease, OPL 310 which will cost Lekoil a total of $100 million in developing the oil block.
According to information gathered by SweetcrudeReports, a tussle ensued between both companies over delay by the Department of Petroleum Resources, DPR to grant consent to renewal of the oil block license.
Lekoil had an agreement with GE Oil & Gas now Baker Hughes for technical partnership and investment in appraisal of the discovery, possibly leading to discovery of first oil on the Ogo field. The two companies already signed a Memorandum of Understanding.
However, we learnt that OPL 310 expires in 2018, and Lekoil is expecting DPR to give the second of the two consents of Nigerian authorities on the Oil Prospecting Lease (OPL) 310 but, Optimum is angered that Lekoil did not consult it before taking such step.
Optimum is Lekoil’s partner and license holder of OPL 310.
The consent to complete the transfer of the original 17.14% participating interest that Lekoil acquired on the lease in February 2013 was granted by the Minister of state for Petroleum Resources in June 2017, remaining DPR’s approval upon ministerial consent for a second acquisition that the company made on the same block.
In November 2015, Lekoil acquired Afren’s remaining 22.86% participating interest in the block.
However, Lekoil feels constrained to proceed on its plans as it could not get ministerial consent because Optimum, which is the licence holder and Lekoil’s partner, is not a technically resourced company.
Now, Optimum feels cheated, saying it ought to have been consulted when Lekoil acquired the equity from Afren, refusing to append its signature for DPR’s approval.
Without a go-ahead from Optimum, Lekoil will be denied a consent.
Optimum is now pushing for a renegotiation of terms and Lekoil is having none of it.
According to Lekoil, the company is also in discussions with other potential partners for the financing of the appraisal programme, following which, and subject to the fulfilment of a number of conditions including a positive well result, Baker Hughes, through a consortium SPV, and Lekoil through its funding partners, intend to invest funds towards the full field development capital of the project.
Lekoil estimated this cost to be US$400MM for full field oil development and US$600MM for subsequent upstream gas field development.
*Written with additional information from Africa Oil & Gas Report.