Page 5 - AfrOil Week 48 2020

AfrOil COMMENTARY AfrOil

Some successes Al-Monthiry’s remarks are in line with the state-
Even so, the company is not struggling on every ment issued by Tullow before the Capital Mar-
single front. kets Day event.
It has chalked up a few successes this year, In that statement, the company said that it
such as the finalisation of a farm-out transaction was working to make the most of the “substan-
worth $575mn with France’s Total. As a result of tial potential within [its] large resource base
that deal, it has been able to scale back opera- associated with its producing assets, where
tions in East Africa, a region where it has run up there is extensive infrastructure in place.” It also
against many challenges. It also reported a profit said it hoped to start realising that potential in
and was able to meet production targets in the the second quarter of next year, when it is due
first half of the year. to launch the first phase of its investment pro-
Additionally, it was quick to appoint Rahul gramme with a multi-well drilling programme
Dhir to the position of CEO, replacing McDade. offshore Ghana.
And Dhir appears to be hopeful that the com- The company continued: “In Ghana ... Tullow
pany is well on the way towards making up some has produced just 400mn barrels of oil (gross)
of the ground it has lost over the last couple of from 2.9bn of oil in place (OIP, circa 14%).
years, with the help of a new investment plan. This plan, alongside a rigorous focus on costs,
Tullow unveiled that plan last week during is expected to generate material cash flow over
a virtual Capital Markets Day event hosted by the next decade, which the group anticipates
Dhir, along with CFO Les Wood, managing will enable reduction of its current debt levels
director for Ghana Wissam Al-Monthiry and and deliver significant value for its host nations
human resources chief Julia Ross. and investors, [as well as] production growth
It also said in a statement issued beforehand in the medium term and the ability to sustain
that it intended to focus on its oil-producing production over the longer term. The first phase
assets in West Africa. of investment will start in the second quarter of
2021, with the commencement of a multi-well
First priority: Ghana drilling programme in Ghana.”
And according to a Reuters report published Even so, Ghana and West Africa will not be
afterwards, the company’s strategy hinges on Tullow’s only target.
upstream development projects in offshore
Ghana. South America and East Africa
Tullow’s Ghanaian assets include Jubilee, one According to the statement, the firm is not
of the largest oil crude deposits discovered off giving up entirely on South America and East
the coast of West Africa since the turn of the cen- Africa.
tury, and Tweneboa-Enyenra-Ntomme (TEN), In Kenya, it has already begun the process
a block that is home to three oilfields. of re-assessing its upstream programme in the
Tullow acquired its stakes in these assets in hope of drawing up new production plans that
2004, via its purchase of South Africa-based remain viable when world oil prices are low. It
Energy Africa. Since then, the fields have has also teamed up with its joint venture part-
become its largest productive assets, but they ners to seek the Kenyan government’s permis-
have also been the source of some frustration. sion to extend their licences until the end of
Earlier this year, Tullow reported a decline 2021. Tullow intends to
in reserves at Enyenra and said that Ghana In South America, meanwhile, it is work- spend $180mn
National Gas Co. (GNGC) was requesting lower ing to develop a better understanding of the
volumes of associated gas from Jubilee and TEN. prospectivity of specific basins – especially the in Ghana next
Even so, it hopes to effect a turnaround “emerging basins” where it holds “substantial
very soon. According to Reuters, Al-Monthiry acreage in Suriname, Guyana and Argentina,” year, more than
revealed that the company intends to spend the statement said. It is, for example, reviewing
$180mn in that country in 2021, more than potential drilling sites at the Orinduik block half of its total
half of its total investment budget of $325mn. offshore Guyana in the hope of improving its investment
He also said Tullow would work to push associ- chances of discovering light sweet crude oil. It
ated gas off-take levels at its Ghanaian fields up also intends to join Israel’s Ratio Petroleum and budget of
to more than 130mn cubic feet (3.68mn cubic the other shareholders in Block 47 offshore Suri-
metres) per day as of next year. name in spudding the Goliathberg-Voltzberg $325mn
Over the long term, he added, the company North-1 exploration well in the first quarter of
will drill dozens of new wells offshore Ghana. It 2021.
intends to sink 26 wells at Jubilee by 2030 and Even so, these initiatives will be smaller in
will drill another 23 during the same period, he scale than Tullow’s plans for Ghana, which will
said. absorb the majority of planned investments.
In the meantime, he noted, the company They will also seek to minimise costs outside of
will also take the floating production, storage West Africa, the company said in its statement.
and off-loading (FPSO) vessel that it is using to “Tullow has considerable opportunities
develop Jubilee offline temporarily for mainte- to unlock value in Kenya and South America.
nance. He did not say how long the maintenance These require an innovative approach and a
period was anticipated to last. deep geoscience and engineering expertise but
do not require significant capital investment in
High-value assets the evaluation phase,” it said. ™

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