KUALA LUMPUR (Aug 28): 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 FAR's press release today.

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 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 at June 30, 2018. Petronas acquires a 40% working interest with FAR retaining 40% of its original 80% interest," FAR said.

FAR said it has 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."

"We again thank the Gambia Ministry of Petroleum and Energy, the Gambia National Petroleum Company (GNPC), the Government of the Gambia and our broader Gambian stakeholders and look forward to working with them to drill Gambia's first exploration well since 1979 with our co-venturer, Petronas," Norman said.

At the time of writing, Petronas had not issued a statement on its operations in The Gambia.