The oil and gas company Savannah Petroleum Ltd signed with the Nigerien government a production sharing agreement (PSA) on the oil of the R3/R4 licence area covering 5,249 km2 in the Agadem rift basin, a region located in South-East Niger.

According the terms of the agreement, which signing was made public on 31 July, the Nigerien state will freely benefit from a 15% shareholding, lower than the 20% mentioned in the previous production sharing agreement between the two parties on the R1/R2 licence area of 8,406 km2 in the same basin. “The signing of the R3/R4 production sharing agreement is another important deal for Savannah. We hold today about 50% of the Agadem rift basin”, commented Andrew Knott, chief executive of the company.

The agreement orders the British oil and gas company to undertake 3D seismic surveys over 750 km2 and the drilling of two wells during the initial exclusive exploration authorisation period.

Savannah will perform 3D seismic surveys on 500 km2 and drill two wells during this initial period, then 3D seismic surveys on 250 km2 and drill a further two wells during the second extension period.

Savannah Petroleum Ltd, with operations focused on Niger, should disburse, for this agreement, USD 31.1 million in terms of bank guarantee and signing bonus. The signing bonus comes to USD 28 million and is categorised as expenditure recoverable by up to 60%.