Lekoil Ltd (LON:LEK) has inked a deal with General Electric’s oil and gas unit for a collaboration in the development of the African oiler’s development of the Ogo field, offshore Nigeria.
It comes as LekOil continues negotiations with other potential partners in an ongoing process.
The continuing negotiations include plans for a new appraisal well which would be slated for late 2017 or early 2018.
GE is expected to invest in the project, subject to successful appraisal results, and LekOil said that the arrangement will also leverage GE’s equipment and technical expertise.
LekOil expects the full field development cost to be US$400mln, with a subsequent upstream gas field development estimated at a further US$600mln.
The deal with GE would see the energy conglomerate receive a percentage of future cash flows from the Ogo field, as well as the ability to supply products and services for the life of the project.
Envisaged deal terms see LekOil’s 40% stake in the Ogo field unaffected by the GE arrangement.
Lekan Akinyanmi, LekOil chief executive, said: “We are pleased to announce this MOU with GE Oil & Gas which marks the first step in our aim to fully develop the Ogo field.
"The agreement brings a world-class resource to OPL310 and significantly reduces LEKOIL's cost of capital to bring the field into production.
"As we have previously announced, we are still in the process of securing ministerial consent for the remainder of the OPL310 acquisition and we remain confident that we will receive all the necessary approvals prior to the start of the appraisal programme."