Australian junior Far Limited will make a full payment of US$6.03 million to Woodside Energy to fulfill its indemnity obligations under the Sangomar sale and purchase agreement.

Background of the Claim

The payment stems from a decision by Senegal's Ministry of Energy, Petroleum & Mines (MPE) that prevents Woodside from recovering certain petroleum expenditure. This claim is related to Woodside's 2021 acquisition of interests in the Sangomar asset from Far and Capricorn Energy. Woodside has secured its exposure to the project through these acquisitions.

Ongoing Dispute and Arbitration

Woodside has initiated legal proceedings against the MPE concerning this issue. Earlier this year, the company filed a tax arbitration case at the World Bank's International Centre for Settlement of Investment Disputes, following a court action in Senegal over a disputed tax assessment for the Sangomar project.

Payment and Refund Clause

Far has stated it has retained sufficient funds and will make a "prompt payment" in full. The agreement includes a refund clause: if Woodside successfully recovers the petroleum expenditure from the MPE at any time before 31 December 2030, the payment will be refunded to Far. The exact timeline and payment schedule were not disclosed, and Woodside declined to comment on further settlement details.

Project Context

The Sangomar project, a $5 billion phased development using subsea wells tied to an FPSO vessel, began production in June 2024 and is currently producing about 100,000 barrels per day. A final investment decision for phase two, which could include a 30-well subsea system, is pending.