25 Feb 2022 07:00
LUKOIL COMPLETES ENTRY INTO AREA 4 PROJECT
IN SHALLOW WATERS OF MEXICO
PJSC LUKOIL announces completion of transaction of buying the 50% operator interest in the Area 4 project in Mexico through the acquisition of the operator's holding company. The Mexican authorities approved the deal on February 3, 2022. The transaction value amounted to $435 million plus expenditures incurred since January 1, 2021 as of the transaction completion date (about $250 million).
The project includes 2 blocks, 58 square kilometres in total, which are located 42 kilometres offshore in the Gulf of Mexico. The sea depth at the blocks is 30-45 meters. Two oil fields - Ichalkil and Pokoch - are located within the blocks. The recoverable hydrocarbon reserves of the fields amount to 564 million barrels of oil equivalent, more than 80% of which is crude oil.
Production at the fields started in the fourth quarter of 2021; current average daily oil production exceeds 25 thousand barrels. The project is developed in three phases, with a peak daily production rate estimated to be more than 115 thousand barrels of oil equivalent. The partner in the project is PetroBal, the oil and gas subsidiary of Mexican conglomerate GrupoBAL, with the remaining 50% interest.
The project is implemented under a production sharing agreement, which was signed in 2016 for a period of 25 years with the right for an extension for up to 10 years.