Page 5 - AfrOil Week 38 2021

AfrOil COMMENTARY AfrOil

New FDP Potential obstacles
Earlier this month, Tullow published an interim Both Tullow and Africa Oil struck an optimis-
report that outlined its new agenda for Blocks tic note in their statements, indicating that they
10BB and 13T. In the report, it said it had believed the new FDP offered better opportuni-
worked with its partners, Africa Oil (Canada) ties for operational and commercial success than
and TotalEnergies), on a complete redesign of the previous version.
its field development plan (FDP). They also reported that they had submitted a
The redesign is based in part on a new com- draft version of the new plan to Kenya’s Ministry
petent persons report from Gaffney, Cline & of Energy and Petroleum and were due to turn
Associates (GCA) that puts the blocks’ reserves in the final version by the end of this year. Addi-
at 2.85bn barrels of oil in place (OIP), including tionally, they said they hoped to attract a new
585mn barrels in recoverable resources. (Previ- partner to the project.
ously, Blocks 10BB and 13T had been estimated Keith Hill, Africa Oil’s president and CEO,
to hold 1.77bn barrels OIP, including 433mn stressed both points. “Together with our JV
barrels in recoverable resources.) It also incor- partners, we have made significant progress in
porates data from the EOPS project, in which redesigning and optimising Project Oil Kenya,” Tullow Oil is due
Tullow and its partners extracted 450,000 barrels he was quoted as saying in his company’s state-
from the Ngamia and Amosing oilfields. ment. “Compared to the previous field develop- to turn in the
In the new version of the FDP, the companies ment plan, we have a more economically robust
will include four fields in the first phase of pro- project, which I am confident is more attractive final version
duction instead of three, including Ekale as well to potential new partners. We will continue to of its new field
as Ngamia, Amosing and Twiga, in the expecta- work with our JV partners and the government
tion that these four hold about two thirds of all of Kenya towards the final investment decision development
recoverable resources, or 390mn barrels. [FID], and I am pleased that our interests are
They will also change the ratio of production fully aligned on what is a strategically significant plan by the end
wells to injection wells from 2:1 to 1:1, “lead- project for Kenya.”
ing to improved pressure support and higher It remains to be seen whether this show of of 2021
resources recovered from the reservoir,” Tullow enthusiasm pans out. It may very well do so, if
said. Tullow and its partners are able to attract appro-
Additionally, the partners will construct a priate partners and sufficient funding. This may
production facility capable of handling 130,000 not be easy, though, if they draw the wrong kind
bpd of oil, in the expectation that first-phase out- of attention.
put will average 120,000 bpd rather than the pre- Environmental activists and climate advo-
viously reported figure of 72,000 bpd. They will cates are already trying to block the East Africa
also build a larger pipeline with a diameter of 20 Crude Oil Pipeline (EACOP), which TotalEn-
inches (508 mm) rather than 18 inches (457.2 ergies and CNOOC plan to build to carry crude
mm) to handle the additional volumes. from the Ugandan fields they acquired from
Tullow. They have had some success, in that
Higher costs they appear to have convinced several commer-
Tullow has acknowledged that these changes to cial banks to decide against funding the pipeline.
the FDP will bring the cost of the project up. If they turn their gaze southward to the French
In its interim statement, the Anglo-Irish giant’s activities in Kenya, Tullow and its part-
company said it now expected gross capital ners may well have trouble securing the money
expenditures on upstream development and and support it needs to develop its blocks in the
pipeline construction to reach $3.4bn. In a sep- South Lokichar basin – even if they have taken
arate statement, Africa Oil offered a breakdown steps to “improve the environmental and social
of that figure, saying that $2bn would be spent aspects of the project,” as Africa Oil’s statement
on upstream operations and $1.4bn on the notes. ™
pipeline.
Both partners stressed, though, that the new
development plan had benefited from the rede-
sign, as evidenced by the projection that costs
would average $22 per barrel, down from the
earlier estimate of $31 per barrel. Tullow pointed
out that the changes aimed to ensure that the
project was “technically, commercially and
environmentally robust,” while Africa Oil said it
expected the savings to persist beyond the first
stage of production.
“The combination of the [higher resource
estimate and the concomitant expansion of drill-
ing and infrastructure programmes] leads to an
optimal project that delivers more economic
barrels within the licence period and greater
flexibility to incrementally add additional fields
into production without significant infrastruc-
ture modifications,” the latter company stated. (Image: Tullow Oil)

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