In a setback to ONGC Videsh Ltd, Australia's Woodside Petroleum Ltd on Thursday said it has exercised its right to match an offer by the Indian company to buy FAR Ltd's stake in the USD 4.2 billion Sangomar oil project in Senegal.
OVL, the overseas investment arm of state-owned Oil and Natural Gas Corporation (ONGC), had last month reached a deal to buy Australian firm FAR Ltd's 13.67 per cent stake in the Sangomar project off Senegal's shore for USD 45 million.
That deal was subject to a waiver of pre-emption rights by partners.
"Woodside has given notice exercising its right to pre-empt the sale by FAR Senegal RSSD SA (FAR) to ONGC Videsh Vankorneft Pte Ltd (a unit of OVL) of FAR's entire participating interest in the Rufisque, Sangomar and Sangomar Deep (RSSD) joint venture," the Australian company said in a statement.
FAR has a 13.67 per cent interest in the Sangomar exploitation area and a 15 per cent interest in the remaining RSSD evaluation area.
This would have been the first acquisition by OVL in two-and-a-half-years.
But with Woodside exercising the pre-emption rights, the deal is all but gone, a source with knowledge of the development said.
Sangomar is a joint venture with Woodside Petroleum and Senegal's national oil company, Petrosen.
FAR had said last month it would exit the troubled USD 4.2 billion Sangomar project by selling its stake to OVL.
"The acquisition is value-accretive for Woodside shareholders and results in a streamlined joint venture which will assist in our targeted sell-down in 2021," Woodside Chief Executive Officer Peter Coleman said in a statement.
Woodside's stake in the Sangomar joint venture will increase to 90 per cent and the company will remain as an operator.
"The terms of Woodside's acquisition will reflect those of the FAR/OVL transaction, including payment to FAR of USD 45 million; reimbursement of FAR's share of working capital, including any cash calls, from 1 January 2020 to completion; and entitlement to certain contingent payments capped at USD 55 million," it said.
Woodside in August exercised its right to match a USD 400 million offer by Russia's Lukoil to buy Cairn Energy's stake in the RSSD project, making it the largest shareholder.
Woodside, the operator of the block, at present has a 68.33 per cent stake in the Sangomar field and 75 per cent interest in exploration area.
Petrosen holds an 18 per cent stake interest in Sangomar field and 10 per cent in the exploration area of the RSSD Block.
The Perth-headquartered Woodside said its offer is subject to approval by the Senegal government and FAR shareholders.
It plans to commence drilling next year in order to meet its targeted first oil in 2023.
The Sangomar field, currently under development, is located in the deep waters of Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-Conakry Basin (MSGBC Basin), Offshore Senegal, covering an area of 772 sq km and is planned to go on production in 2023 under Phase-1 development.
OVL has 39 projects in 19 countries spanning from Venezuela to New Zealand. It has so far invested USD 29.28 billion in projects abroad.
Its last acquisition was a 4 per cent stake in Lower Zakum Concession in the UAE in February 2018.