Australian oil and gas exploration firm FAR has agreed to sell its 15% stake in the $4.2bn Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore project (RSSD) project offshore Senegal.

ONGC Videsh subsidiary ONGC Videsh Vankorneft signed the agreement with FAR to buy the stake for $45m.

ONGC Videsh is the overseas arm of Indian state-owned oil and gas company ONGC.

ONGC Videsh Vankorneft will be acquiring 13.67% participating interest in the ‘Sangomar exploitation area’. It will also buy a 15% participating interest in the RSSD contract area outside it.

ONGC has agreed to reimburse FAR’s share of working capital for the Senegalese oil project, which is $66.58m, from 1 January.

FAR will also receive contingent payments in the future, valued at $55m, which will be based on various factors with respect to the sale of oil from the RSSD project.

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FAR managing director Cath Norman said: “As we have acknowledged, the market for financing and selling assets has been weak since the impact of Covid was felt in March of this year. In these circumstances, the offer from ONGC represents the best option available at this time and we trust that our shareholders will vote for this transaction.

“FAR expects to have approximately $130m in cash at the close of this Transaction that will be used to rebuild the Company and further our other West African prospects offshore the Gambia and Guinea-Bissau.

“And finally, we wish to acknowledge FAR’s long partnership with Petrosen and the Government of Senegal. Having been in the RSSD project for 14 years, it’s a bittersweet moment to be selling our stake. FAR is committed to our projects in The Gambia and Guinea-Bissau and using our deep knowledge of the MSGBC Basin to potentially explore offshore Senegal again.”

First oil from the Woodside Petroleum-operated RSSD project is targeted for mid-2023.