Woodside Petroleum is "considering all its options" after the shock news of a deal that would see Russian oil heavyweight Lukoil – the subject of US sanctions – join as a major partner in its troubled $US4.2 billion ($5.8 billion) oil project in Senegal.
The $US400 million deal for Cairn Energy to sell its entire 40 per cent stake in the Sangomar oil project to Lukoil adds to the upheaval taking place in the project, where cash-strapped junior partner FAR Ltd has all or part of its stake up for sale after its funding for the costly project fell through on the oil price crash.
Woodside, which holds 35 per cent of the project and is the operator, is seen as a lead candidate to take FAR's stake but is now expected to consider a broader range of options.
Woodside's Sangomar oil project in Senegal is due to start production in 2023. Supplied
As a result, the Sangomar situation is a second joint venture where Woodside could look to exercise pre-emptive rights to prevent the entry of an unwanted partner. Chief executive Peter Coleman has already indicated that pre-emption is a possibility at the North West Shelf LNG venture in Western Australia, where Chevron has advised of its intention to sell out and Woodside doesn't want "the wrong people moving in next door".
"We think Woodside is interested in increasing its stake in Sangomar and may prefer a different JV make-up, so may seek to pursue rights to pre-empt or challenge the sale," Credit Suisse energy analyst Saul Kavonic said.