Lekoil and Green Energy International have sanctioned Phase Two of the development plan of the Otakikpo field offshore Nigeria, but they are still working to close the project financing.
The Otakikpo field, located in a coastal swamp location in OML 11, adjacent to the shoreline in the south-eastern part of the Niger Delta, is operated by Green Energy International Limited with Lekoil, as a financial and technical partner, holding a 40 percent interest.
Production from the field in the first half of 2019 averaged 5,822 bopd gross with no downtime, compared to 2,042 bopd for the same period in 2018.
Lekoil said on Monday that, following the sanction, the JV was in the process of finalizing heads of terms with “Anchor” engineering, procurement, construction and commissioning vendors for cost and schedule certainty to allow Standard Chartered Bank to close project financing as well as complete preparation for project execution.
Also, Lekoil said that the Joint Venture has also renewed the Otakikpo Marginal Field license for twenty years, following the payment to the Department of Petroleum Resources (DPR) the sum of $1 million for the license Renewal fee ($400,000 net to Lekoil).
“After evaluating the existing infrastructure at Otakikpo, Schlumberger, in its role as non-financial, technical partner has assessed the capacity of the infrastructure to be capable of producing 10,000 bopd (4,000 bopd net to Lekoil Nigeria) and, with some debottlenecking, up to 12,000 bopd gross (4,800 bopd net to Lekoil Nigeria). Subject to closing of, inter alia, the project financing, the Joint Venture expects the first two wells of the phased development plan to bring production up to this level. The Joint Venture anticipates adding this incremental production by year-end 2020,” Lekoil said,
As previously reported, the JV in July signed a non-binding Memorandum of Understanding with Schlumberger and a trading subsidiary of an unnamed “major international oil company that has been operating in Nigeria for more than half a century.”
The MOU covers a comprehensive infrastructure sharing and drilling program around a group of marginal field assets in the OML11 offshore license. Under the terms of the MOU, the “Major Oil Company” will provide funding to the Joint Venture alongside the other funding partners, subject to completion of due diligence which is ongoing, entry into definitive documentation and final investment decision. The Joint Venture will seek to enter into an exclusive offtake agreement with the Major Oil Company for the sale of crude produced pursuant to this project, Lekoil said.
“The consortium of GEIL, Lekoil, and Schlumberger will form a multidisciplinary project management team in which Schlumberger will act solely as a technical partner to provide oilfield services and project management services to assist in ramping up production and long-term field management. The project scope also involves the construction of a terminal for evacuation. Financing discussions are progressing, with interest confirmed from key potential financing parties and further announcements will be made in due course,” Lekoil said.