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BP has agreed to pay no-drill fee of $29.3m to the Gambian Government for failing to drill an offshore oil well in A1 block.

The British energy giant secured the exploration rights to drill for oil and gas in the A1 block offshore Gambia in May 2019.

BP was obliged to complete the drilling work within two years ending 29 July 2021, according to the licence terms.

However, the firm has completed other obligations, including acquisition and reprocessing of 2D and 3D seismic data, as well as undertaking environmental impact assessment.

The Gambian Government spokesperson Ebrima Sankareh said: “In early 2020, the Covid-19 pandemic struck, causing a drastic change in the global oil and gas industry and leading BP to suspend plans to drill as earlier planned.”

As a result, BP notified the government in July 2020 that it would not be able to drill the exploration well in the A1 Block.

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By GlobalData

Sankareh added: “BP will be obligated to pay to government the difference between the agreed work commitment and the performed work commitment.”

With BP’s exit, the A1 Block will be reverted to Gambian Government free of all encumbrances. The block will now be on the market for licensing.

Gambia revoked African Petroleum’s rights on the A1 block in 2017 as a result of failure on the company’s part to meet contractual obligations and expiry of the licence period.