The Strategist

BP acquired Mauritania and Senegal assets for $ 900 million

12/19/2016 - 16:09

BP PLC is investing nearly $ 1 billion in a massive gas field off the coast of northwestern Africa. This suggests that major oil and gas companies continue to look for opportunities to increase production against the background of recovery after serious collapse in the oil and gas market.

Under the agreement with Kosmos Energy Ltd., which is engaged in exploration, in the coming years BP will have to spend more than $ 900 million to discover prospects of Tortue project in the waters of Mauritania and Senegal. According to some estimates, the deposit contains up to 50 trillion cubic feet of natural gas. Energy Information Administration (EIA) of the USA says it is enough to meet demand of the UK during about 20 years.
In addition, the transaction will make BP be operator of the project. This will ensure that the British oil giant still has a possibility of growth after two years of low prices for energy, and cost savings, which led to a reduction in the number of new drilling operations. BP’s funds will be used for drilling, conducting feasibility study and development costs. Kosmos says it will facilitate a final investment decision on the project by 2018.

The deal also indicates that the world's largest oil companies continue to see potential in multibillion-dollar joint natural gas ventures. They are not confused by the fact that it takes years to bring the project to the end, and are not afraid of risks associated with a potential gas oversupply. For example, Exxon Mobil Corp. is now engaged in natural gas projects in Papua - New Guinea, Gulf of Mexico and Mozambique.