Page 9 - AfrOil Week 11 2020

AfrOil PERFORMANCE AfrOil
This appears to have been a prudent move, given that Brent and WTI crude prices have sunk from the $50-55 per barrel range to around $30-35 since March 6.
It also has the potential to keep Tullow ahead until the end of next year, if current forecasts for oil prices prove accurate. “[The] forward curve for 2020 and 2021 [has fallen] to approximately $38 per barrel and $43 per barrel respectively,” the report explained.
Tullow stressed, though, that these hedges would not protect it against low prices indef- initely. “If oil prices remain at or below their current levels for an extended period of time, this would adversely impact our future financial results,” it commented.
Cost cuts and coronavirus
In the meantime, the company is taking steps to reduce its operating expenses in 2020. In the report, Tullow explained that it had recently concluded a business review that took account of its resources and organisational structure.
One of the recommendations arising from the review involves a 35% reduction in staff, it said. These redundancies could bring the com- pany’s cash general and administrative expenses down by $200mn over the next three years, but they will also necessitate a re-organisation that will entail costs of about $50mn, it stated.
Tullow went on to say that it was taking steps to protect its expatriate and local employees from the coronavirus (COVID-19) pandemic. “In both Ghana and Kenya, Tullow’s in-coun- try teams have set up their EID (Emerging Infectious Disease) management committees in response to the current COVID-19 out- break,” it said. “These EID committees steer the local management response to the outbreak, including ensuring that our contractors have implemented appropriate measures. We have also implemented ‘self-declaration’ forms for
POLICY
Fuel market survey: Ghana, Nigeria, Angola, Kenya
Lower oil prices are raising questions about current pricing policies
all personnel travelling to our offshore assets in Ghana that require people to sign off that they have not been to the ‘specified locations’ as defined by the UK Foreign & Commonwealth Office in the last 30 days, as well as implement- ing business travel restrictions to and from these ‘specified locations’.”
It added: “In the event that the COVID-19 outbreak escalates, the country-specific busi- ness continuity plans set out how Tullow will continue to operate, recover quickly from and effectively manage the response.”
In West Africa, Tullow operates the Jubilee and TEN (Tweneboa-Enyenra-Ntomme) block in Ghana and also holds non-operating stakes in fields in Cote d’Ivoire, Equatorial Guinea and Gabon. In East Africa, it is leading pro- jects in Uganda’s Lake Albert region and Ken- ya’s Lokichar Basin. Elsewhere in Africa, it has acquired a majority stake in assets in Namibia and Comoros and has exited projects in Mauri- tania and Zambia.
In South America, the company serves as operator of the Orinduik block offshore Guyana. It has non-operating stakes in fields in Argen- tina, Peru and Suriname and is also a partner in the Walton-Morant project in Jamaica. ™
Tullow has suffered setbacks in Uganda over the last year (Photo: Tullow Oil)
REGIONAL
THE downturn in world oil prices is already having an impact on fuel markets in Africa. This article offers a brief look at recent developments in four African states.
Ghana
Ghana’s main opposition party, the National
Democratic Congress (NDC), has urged Pres- ident Nana Akufo-Addo to authorise an imme- diate 20% reduction in gasoline prices.
In a statement dated March 9, the party explained its demand by pointing out that cur- rent gasoline prices did not adequately reflect developments on world oil markets.
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