By Delphine Strauss
Published: January 20 2006
BG, the UK oil and gas group, said on Friday it was entering the Nigerian upstream sector through a deal giving it a 45 per cent interest in an offshore exploration venture.
BG acquired the stake under a farm-in agreement with Sahara Energy Exploration and Production, which won a license for the area in 2005 and will itself retain a 45 per cent interest. Seven Energy Nigeria holds the remaining 10 per cent.
The partners signed a production sharing contract on Thursday to start work at Block 332, located in deep water off the western Niger Delta around 100km south-east of Nigeria’s business capital Lagos.
“Nigeria is a prolific hydrocarbon province which fits well with our market focused Atlantic Basin strategy,” said Stuart Fysh, BG’s group executive vice president for the region.
North Sea gas from its UK operations accounted for 40 per cent of group production in 2004, but as these fields mature BG is increasingly investing in growth markets such as Egypt, Tunisia and Kazakhstan.
It has announced its entry to Nigeria’s upstream sector in a week when militants in the Niger Delta threatened to kill three Royal Dutch Shell workers they have taken hostage. Rising violence in the area had shut down ten per cent of Nigeria’s oil production on Friday, helping drive oil prices above $67.
BG did not disclose financial details of the deal but it is not expected to have a significant impact on its portfolio.
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