This article first appeared in The Edge Financial Daily on August 29, 2018

KUALA LUMPUR: The Republic of The Gambia government has approved the assignment by FAR Gambia Ltd of a 40% interest in petroleum licences for offshore Blocks A2 and A5 in the West African nation to a subsidiary of Petroliam Nasional Bhd (Petronas), according to an FAR press release yesterday.

FAR said under the terms of the farm-out agreement executed in February 2018, Petronas will fund 80% of the exploration well costs of the Samo-1 up to a maximum total gross cost of US$45 million (about RM184 million).

“In addition to the well costs, Petronas will pay FAR a cash consideration of US$6 million plus 80% of non-well back costs. The proceeds are subject to reconciliation and were estimated to be A$19 million (RM56.54 million) at June 30, 2018. Petronas acquires a 40% working interest with FAR retaining 40% of its original 80% interest,” FAR said.

FAR said it had secured a contract with a subsidiary of Stena Drilling, which will provide and operate the Stena DrillMAX drillship to drill the Samo-1 well in late 2018.

FAR managing director Cath Norman said in the statement: “By securing the approval of The Gambian Ministry of Petroleum and Energy, FAR has achieved another milestone towards its objective of drilling the substantial oil resource potential of the highly prospective Blocks A2 and A5 in The Gambia.”

At the time of writing, Petronas did not issue a statement on its operations in Gambia.