LUKoil, the largest Russian oil company, has decided to prospect for oil and gas on the West African continental shelf and is preparing to buy 56.66% stakes in three prospecting projects in the Ivory Coast and Ghana from the U.S. company Vanco Energy.

Experts said LUKoil would spend no more than $200 million on these projects.

All three projects are implemented under a production sharing agreement (PSA) and envision prospecting operations over an area of 15,000 square kilometers.

Vanco Energy currently owns 85% stakes in each project, whereas local authorities are entitled to 15%, said Grigory Volchek, spokesman for LUKoil Overseas Service Ltd.

He said LUKoil and Vanco Energy would close the deal this summer but declined to name its price and subsequent investment volumes.

A Vanco Energy spokesperson also declined to comment.

This is not the first African project for LUKoil. Previously, the company said it had bought a 63% stake in a prospecting project on the Ivory Coast shelf, but did not go into details.

Experts said they couldn't estimate possible LUKoil expenditure because they knew little about African PSAs.

LUKoil Overseas said the three sectors are located at a depth between 200 and 3,000 meters.

Alpha Bank analyst Dmitry Lukashov said it could take the partners $30-$50 million to drill one well.

MDM Bank analyst Andrei Gromadin estimated such expenditure at $40-$60 million.

Under the agreement, all investment is to come from LUKoil, which may spend as much as $200 million.

Gromadin said this is a high-risk project for LUKoil. However, African projects would be far more expensive if prospectors found substantial oil and gas deposits.

Consequently, LUKoil could profit by merely reselling them, he told the paper.

The U.S. publication Oil & Gas Journal placed Ghana and the Ivory Coast among the poorest African countries in terms of proven oil and gas deposits, namely 100 million and 15 million barrels (13.6 million and 2 million metric tones), respectively.

It appears that both countries account for just 0.7% of proven LUKoil deposits (16.12 billion barrels).

All foreign projects implemented by LUKoil account for 6% of its proven deposits, receiving $91 million worth of investment in 2006.