Lukoil Adds Interest In Offshore Congo

Acquisition of Marine XII Stake

Multinational energy firm Lukoil has acquired a stake in the Marine XII license for the Republic of Congo, paving the way for increased offshore development and breakbulk demand in the country.
The 25 percent stake in the licence was purchased from explorer New Age M12 Holdings for US$800 million and includes 571 square kilometers on the continental shelf of the Republic of Congo.

“Entering this project is in line with our M&A strategy. The project is characterized by explored reserves, substantial production growth potential, access to well-developed infrastructure and it also fits our technological expertise. On top of that, the project is already free cash flow positive,” said Vagit Alekperov, president of PJSC Lukoil.

Strengthened Partnership with Eni

Lukoil will develop the license area with project operator Eni and aims to increase production from the current rate of 28,000 barrels of oil and gas condensate per day. At present, only two of the five fields in the licence are producing and total reserves of 1.3 billion barrels of oil equivalent are estimated.

“We are pleased to expand our partnership with Eni that is well-experienced in international offshore projects and known for its successful footprint in the region,” Alekperov added.
Eni owns a majority 65 percent stake in the project, while state company Société Nationale des Pétroles du Congo holds the remaining 10 percent.

Breakbulk Expertise

Located 20 kilometers from shore and at sea depths of 20 to 90 meters, the Marine XII license is expected to require specialist breakbulk and offshore engineering expertise to develop.

“The transaction … fits with the Russian company’s aims of developing its offshore expertise and grow its presence outside its Russian stronghold,” said Jean-Baptiste Bouzard, senior research analyst at Wood Mackenzie.

Headquartered in Moscow, PJSC Lukoil Oil is the second-largest company in Russia after Gazprom, and the largest non-state enterprise in the nation in terms of revenue. The firm is also considering joint projects for gas processing and petrochemicals in Iraq after meeting with Thamir Al Ghadhban, deputy prime minister and minister of oil for the country.
“The parties discussed the progress of West Qurna-2 project and agreed to consider the possibility of early commissioning of Eridu field (Block 10). The Minister of Oil of Iraq expressed the support of LUKOIL's initiatives aiming at development of Iraqi projects, fulfilling obligations under the Service Contracts,” a spokesperson for Lukoil said.