Tullow anticipates bigger finds in offshore West Africa

Business News of Monday, 8 April 2013

Source: Graphic Business

Oil Rig@jubilee

Tullow Oil Plc is optimistic it will make major discoveries off the shores of West Africa after announcing pockets of oil find in those waters last year. The company’s biggest find to date has been the Jubilee Field in Ghana, which was discovered in 2007 and is estimated to hold up to one billion of recoverable oil reserves, according to data on Tullow’s website.

Tullow Oil Plc is the parent company of Tullow Ghana, which operates the Jubilee Field. After the Jubilee Field discovery and its subsequent start of production in December 2010, the company has not encountered any oil find in the sub-region at a magnitude closer to Jubilee despite continuous explorations.

However, its group Head of Media Relations, Mr George Cazenove, said in an interview in Accra that all hope was not lost as data available to the company showed positive results, at least in the near future. “We have made some discoveries along the West African coast but none has been a hub-class kind of discovery; the one comparable to Jubilee.”

“But we are still optimistic of a bigger find because we believe there is a Jubilee-kind of discovery along that line,” Mr Cazenove said. He spoke to the Daily Graphic after briefing selected journalists on the company’s operations for 2012.

Tullow Oil last year announced new discoveries in the territorial waters of Ghana, Côte d’Ivoire, Guinea and Sierra Leone, all of which are in the West African coastline “There are a lot of prospects along that coast and Tullow will continue with explorations there,” Mr Cazenove said, pointing to geological data available to the company.

The West African coast was, until Tullow’s discovery of Jubilee in 2007, considered not lucrative to oil exploration and production (E&P) companies as many had returned, sold out or abandoned their licences after a series of fruitless explorations. The discovery of Jubilee and subsequent ones by Tullow and its partners has, however, turned the area into a hot cake for red-eyed E&P companies. Tullow’s founder and Chief Executive, Mr Aidan Heavey, said on the company’s website that it was looking at opening up new basins in West Africa “where we see prospects similar to those we have discovered in Ghana.”

The area, off the shores of the sub-region, stretches from Mauritania to the Gulf of Guinea. Mr Cazenove also announced at the briefing that Tullow Ghana intended to sell part of its stake in the Tweneboa-Enyenra-Ntomme (TEN) project in other to cut down on the risks associated with its current stake in the field.

The TEN project is about 25 kilometres off the Jubilee Field and Tullow, which is the operator, holds about 50 per cent interest in it. The rest is shared between Anadarko and Kosmos with each having 18 per cent and the Ghana National Petroleum Corporation (GNPC) and Sabre oil and Gas with 10 and 4.05 per cent share respectively.

“For a company with a capacity the size of Tullow, we think it’s too risky to hold such a 50 per cent stake in one field,” the company’s Head of Media Relations said, pointing to high costs of investments and possible investment losses as bases. In the oil business, as is the case with all partnerships, investments, revenues and risks are shared based on the shareholding structure in the field under question. Mr Cazenove would, however, not say if interested companies had contacted Tullow for discussions on the possible sale following an earlier announcement by the company’s CEO.

It is not immediately clear if any of the partners of the TEN projects would be interested in the offer but the Director of Operations at GNPC, Mr Thomas Manu, said in a separate interview that the corporation would consider the offer and take a decision. “It will be based on whether or not the acquisition will benefit the GNPC and good people of Ghana,” Mr Manu said, adding that issues regarding the cost of the sale and the availability of funds to pay for it would inform the corporation’s posture to the deal.

GNPC in 2010 got the financial backing from its counterpart from China, CNOOC, to make a failed bid for Kosmos’ assets in the country, including some stake in the Jubilee Field, and Mr Manu said the corporation’s ability to attract such a partner or at best raise the funds independently would partly influence its reaction to the Tullow offer.

“GNPC doesn’t have two or three billion US Dollars sitting somewhere we can say we will always fall on it if the need arises; We would have to raise the funds and the success or otherwise will determine the action we will take,” Mr Manu said. The GNPC is entitled to prior notification of any partner’s decision to offload its stake in a field and the government of Ghana, through the corporation, has a first right of refusal, according to the Petroleum Agreement (PA).

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