Lekoil signs $15m off-take agreement with Shell subsidiary

Lekoil Ltd, an oil and gas exploration, development and production company with a focus on Africa, has agreed an off-take deal with Shell Western Supply and Trading Limited, a subsidiary of Royal Dutch Shell Group of companies.

The deal is an advance payment facility will see Shell Western and Trading providing LOGL, with a facility of US15million for its production from Otakikpo marginal field.

Lekan Akinyanmi, LEKOIL’s CEO comments on the deal, “We are pleased to be working with Shell as a commercial and financial partner to enable the continued development at Otakikpo.

“The facility is a strong endorsement of our commercial production and secures funding which is non-dilutive to our shareholders. We believe that this relationship with a globally recognised O&G major will complement LEKOIL in its long-term growth and aspirations.”

According to the terms of the deal, all crude sales will be done at the prevailing market price and lifting is expected to begin in the second-quarter of the year.

The Otakikpo marginal field is sited in a coastal swamp location in oil mining lease (OML) 11, adjacent to the shoreline in the south-eastern part of the Niger Delta.

 The Otakikpo Joint Venture (LEKOIL as Financial and Technical Partner to GEIL) began operations in December 2014. Ministerial consent was granted by the Honourable Minister of Petroleum Resources of Nigeria in June 2015. LEKOIL funded the costs of development and is entitled to recover this expenditure preferentially from 88 per cent of production cash flow from Otakikpo.

The Otakikpo Field Development Plan consists of two phases. Phase 1 comprises the recompletions of two wells, Otakikpo-002 and Otakikpo-003, with the installation of an Early Production Facility of 10,000 bopd capacity and export via shuttle tanker.

Phase 2 covers the subsequent incremental development of the rest of the field with a new Central Processing Facility and new wells expected.

In February Otakikpo went into continuous production with initial output of 5,000 barrels a day although; it is targeting double that figure.

ISAAC ANYAOGU