SYDNEY/LONDON (Reuters) - Oil exploration company Cairn Energy (CNE.L) is in talks with BP to sell a 30 percent stake in its deepwater SNE field offshore Senegal, which could be valued at around $600 million, banking sources and a Senegal oil ministry source said.
“We are aware that BP wants to acquire a stake in Cairn Energy, but they are awaiting validation by the state (of Senegal),” an adviser to Senegal’s oil minister, who declined to be named, told Reuters by telephone.
He had no further details. However, Mamadou Faye, director of Senegal’s state oil firm Petrosen, said no formal request had yet been made by the companies.
“There is no substance to reports concerning Cairn’s assets in Senegal,” a Cairn spokesperson said.
BP (BP.L) declined to comment.
Cairn’s share price rose around 5 percent on Tuesday, BP’s was up around 1 percent.
Oil majors have been increasingly homing in on the waters off Senegal, as well as neighbors Mauritania and Gambia, where they suspect hundreds of millions of barrels lie.
A deal would further boost BP’s position in Senegal following a joint venture with Kosmos Energy in December last year, which revealed a major gas discovery in May. BP also has investments in two other offshore fields there.
Senegal and Mauritania are two areas BP is targeting over the next decade and it plans to spend billions in the Tortue LNG project which is expected to produce its first gas in 2021.
The deepwater SNE project is the first oil development in the West African nation. Cairn shares the project with Australia’s Woodside (WPL.AX) and FAR Ltd (FAR.AX). The companies expect to start producing by 2021. Woodside, Australia’s biggest independent oil and gas producer, bought a 35 percent stake from ConocoPhillips last year for up to $430 million, or $2.20 a barrel based on reserves of 561 million barrels at the time, before these were upgraded to nearly 650 million barrels.
FAR Ltd has said the project could start producing before 2021, and at a higher rate than flagged before.
Oil majors including Total SA and China’s CNOOC Ltd have also been investing in the waters off this part of the West African coast.
Additional reporting by Ron Bousso in London; Writing by Tim Cocks; Editing by Mark Potter