Australia’s Woodside Petroleum said on Monday it has exercised its right to match a $400 million offer by Russia’s Lukoil to buy Edinburgh-based Cairn Energy’s entire stake in the Sangomar oil project in Senegal.

Cairn said last month it agreed to sell its Senegal interests to Lukoil for up to $400 million and that it intends to return at least $250 million to shareholders as a special dividend after the sale.

Woodside’s equity interest in the RSSD joint venture — Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore — would increase to 68% after completion of the acquisition and Woodside would remain operator.

The acquisition by Woodside would remove “the potential uncertainty of US sanctions applying to the Sangomar Field development,” said Woodside CEO Peter Coleman.

Lukoil is on a US list of sanctioned Russian firms.

Lukoil declined to comment on Woodside’s move. 

Woodside said the acquisition remains subject to Government of Senegal approval, Cairn Energy shareholder approval and “other customary conditions precedent.”

Woodside said it would make an upfront payment of $300 million and contingent payments of up to $100 million.

Cairn said: “Further to our announcement on 27 July 2020 of the proposed sale of Cairn’s interests in the Sangomar field offshore Senegal to Lukoil, Woodside has exercised its right to pre-empt on the same terms and conditions.

“In the event that no other JV parties pre-empt prior to the deadline of 26 August 2020 then Woodside will acquire Cairn’s entire interest in the project.

“The transaction remains subject to Government of Sénégal consent and Cairn shareholder approval.”

Woodside CEO Peter Coleman added: “Progressing the Sangomar Field Development and delivering targeted first oil in 2023 is an important part of Woodside’s growth strategy.

“Increasing our interest maintains the early momentum achieved since achieving final investment decision with our joint venture partners earlier this year and will simplify the equity structure for the RSSD joint venture.

“The strength of our balance sheet and our liquidity position have enabled us to take advantage of this opportunity.

“We will continue to apply our prudent approach to capital and balance sheet management, including consideration over the next 12 months of value accretive reduction in our equity interest in Sangomar.

“We look forward to completing the transaction with Cairn and working with all stakeholders, including potential new joint venture partners, to successfully deliver Senegal’s first oil project.”