Lukoil Sangomar bid will not cause sanctions: Woodside

Russian private-sector upstream firm Lukoil's A$220mn ($171mn) takeover offer for Australian independent Far will not trigger US sanctions on the 100,000 b/d Sangomar oil field offshore Senegal, project operator Australian independent Woodside Petroleum said.

Lukoil this week made its second attempt to buy into Sangomar through a bid for Far, which owns 13.67pc of the project.

The bid does not prompt pre-emptive rights in the Sangomar project as the transaction is for Far's publicly traded shares and not directly for the company's stake in Sangomar, Woodside chief executive Peter Coleman said.

"The Lukoil offer will not trigger the US sanctions as it is below the 33pc threshold for the sanctions to become applicable to the project," Coleman said.

The move by Lukoil prompted Far to defer its shareholder meeting, scheduled for today, which was to vote on a pre-emptive offer from Woodside. This may cause complications for Woodside, which wants to reduce its stake in Sangomar to 40-50pc this year.

Woodside bought a 40pc stake in Sangomar from UK independent Cairn Energy, using its pre-emptive rights to buy Cairn's stake after the UK firm had agreed to sell its interest to Lukoil. The sale to Lukoil would have placed Sangomar under Washington's sanctions radar.

Any successful purchase of Far by Lukoil would entitle the Russian firm to the same pre-emptive rights as the other project partners, including the right to buy some of Woodside's proposed sale of its stake. Woodside owns 68.33pc of Sangomar.

"Lukoil has expressed an interest in buying into Sangomar before and they know that having a minority stake does not give them any influence over the development and operation of the project, whereas had they bought the Cairn stake they would have had a much larger say in the project," Coleman said.

Senegal's state-controlled energy firm Petrosen raised its stake in Sangomar last year to 18pc from 10pc, exercising its right to increase its share after the project was sanctioned in January 2020.

The US sanctions on Russia stem from Moscow's invasion of the Ukraine in 2014.

By Kevin Morrison