Petrosen funding go-ahead

Woodside Petroleum is close to finalising a deal with Senegal's state-owned Petrosen to help finance part of the latter's 10% stake in the planned Sangomar development.

The funding deal is believed to have attracted an interest rate close to 6.5%, said sources.

This is not the arrangement offered last November, which is understood to have attracted a 7% interest rate to cover risk for phase one, rising to 13% as oil started pumping.

Last month saw intense talks to resolve the funding impasse at meetings in Dakar, London and Melbourne, spearheaded by Petroleum & Energy Minister Mouhamadou Makthar Cisse and COS-Petrogaz, the Strategic Oil & Gas Committee reporting directly to President Macky Sall.

Sangomar's partners hope to meet in Dakar this month to further clarify issues.

Constrained by the World Bank and the International Monetary Fund to avoid new borrowing, Senegal struggled to secure funds during a roadshow in London late last year, prompting Cisse and COS-Petrogaz officials to urgently seek cover elsewhere for cash calls if Sangomar goes ahead.

After several false starts, it is hoped a ruling soon from the International Chamber of Commerce, clarifying Woodside’s title to a 35% operating stake, will enable lenders to commit ample funds to allow Woodside's board to take an unconditional final investment decision.

The first phase of the deep-water Sangomar project is expected to cost $4.2 billion.

Assuming Woodside's equity position in Sangomar is confirmed, and once construction starts, Petrosen may look to alternative revenue flows driven by BP's Greater Tortue Amheyim (GTA) liquefied natural gas project, due on stream in 2022.

BP is understood to have agreed an interest rate lower than 6.5% to enable Petrosen’s participation in GTA phase one.

Meanwhile, Dakar will launch an offshore licensing round on 31 January, with 12 blocks designated as vacant for bidding on Petrosen maps.

Some "vacant" blocks have existing licence holders defending titles or are being arbitrated. Farm-in talks are under way for many disputed licenses with Cisse having instructed lawyers to assess litigation threats.

One source told Upstream he hoped the round - due to close on 31 July - will go ahead "on safe grounds... to avoid repercussions and legal complaint,” although Sall is understood to want to offer as many blocks as possible to entice oil majors.