Tullow Oil to increase West African production by 50%
The company said the increase is a result of Ghana's operated Tweneboa Enyenra Ntomme (TEN) development
“What you see next year is a substantial turning-point because our capital budget will go from $1.9bn down to $1.2bn so the outlay is gone down by $700m and the production is going up by 50% which will take us over 100,000 barrels a day (b/d). It is very critical project for the company”, Tullow Oil’s COO Paul McDade said 28 October on the side lines of the Africa Oil Week in Cape Town.
The project is on schedule and budget to deliver first oil in mid-2016, three years after the 300m barrels of oil equivalent development was approved by the government of Ghana. The project’s total estimated gross cost is almost $5bn. The FPSO vessel will begin its journey from Singapore in December 2015 and arrive in Ghana by February 2016. The vessel is expected to produce 80,000 b/d.
The field is situated around 40 miles offshore western Ghana and just 12 miles from Tullow’s flagship operated asset, the Jubilee field. Tullow’s interest in the TEN development stands at 47.18% and its partners in the project comprise Kosmos Energy, Anadarko Petroleum, GNPC (Ghana National Petroleum Corporation) and South Africa’s PetroSA.
Elsewhere the company is targeting new basins across its Kenya acreage to add significant resource beyond the already discovered oil in the South Lokichar basin.
Tullow’s exploration director Angus McCoss said the company is considering further exploration activities in Kerio Valley basin in Kenya and plans to drill the Cheptuket-1 well in block 12 in December.
“We also have an interesting new upside play in the South Lokichar basin which our explorers are looking at that carefully and we will be planning a well in the future”, he said.
The company vice president, Tim O’ Hanlon, admitted the company had issues. "ITLOS (International Tribunal for the Law of the Sea) rulings, pipeline routings, future tariffs. But all these issues are mere speed bumps. What major infrastructure projects anywhere come problem-free? None of them”, he told delegates at the conference.
The Hamburg-based ITLOS in April gave Ghana permission to continue operations on developments in the TEN oil field after the Ivory Coast had requested that its neighbour suspend exploration in the disputed zone. Final judgment on the case is expected late 2017.
O’Hanlon said that the company has completed its “painful restructuring exercise.”
“Tullow reacted quicker than most companies in the year. By early this year, we had already made some painful choices by letting go and cancelling worthy but complex development projects that were in our portfolio, cutting dividend to shareholders and cutting headcount by 35% and chopping our exploration budget from nearly $1bn where it was in previous years to a mere $250m which it is now”, he said.
Tullow’s total Capex stands at $2bn, almost unchanged from last three years with 90% earmarked for Africa. The TEN project will take the lion’s share of that sum, O Hanlon said.
The company has plans to explore “aggressively” again in Mauritania, Namibia, Madagascar, Guinea and Kenya. “We have our eyes on a few other countries which I won’t be mentioning”, he said.