Lekoil pens offtake deal for Otakikpo oil with Shell
- Business & Finance
Africa-focused oil and gas company Lekoil has signed a commercial offtake agreement with Shell Western Supply and Trading Limited, a subsidiary of Royal Dutch Shell.
Lekoil said on Thursday that it executed an offtake agreement in respect to the sales of its crude entitlement from the Otakikpo marginal field offshore Nigeria.
The field is operated by the Nigerian oil and gas company Green Energy International with a 60 percent interest while Lekoil holds the remaining 40 percent as a technical and financial partner.
According to Lekoil, pricing will be determined at future spot market prices, net of marketing costs.
The offtake contract allows Shell to undertake the lifting of Otakikpo crude from the FSO Ailsa Craig. All crude sales will be made at the prevailing market price, Lekoil said.
Lekoil expects the first lifting from the IMA Terminal to begin in early second quarter.
To remind, the company said in December of 2016 that the Otakikpo oil was flowing to onshore storage tanks and that it would be evacuated upon the completion of an offshore pipeline.
All onshore facilities and the offshore pipeline were signed off by the regulators in February 2017, marking the beginning of continuous production from the Otakikpo Marginal Field.
After the commissioning of the pipeline, Lekoil said it would attempt to ramp up production from 5,000 bopd to 10,000 bopd by the end of the second quarter of 2017.
Otakikpo 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 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.