Tullow secures deals to develop oil finds off Ghana

TULLOW OIL has secured the deals it needs with its partners and the Ghanaian government to begin the development of its oil finds in the African country.

Tullow said yesterday it was on track to begin producing oil from its Jubilee One licence area off Ghana’s coast in the second half of next year.

Chief executive Aidan Heavey told The Irish Times the company was likely to begin production in the fourth quarter of 2010.

Jubilee is primarily an oil well, but is also likely to produce some natural gas. The company has agreed to sell this gas to the Ghanaian state, but will give it the initial 200 billion cubic feet (bcf) of gas for free.

Mr Heavey said the government there intended building a gas-processing facility, and the company intended to aid it in this investment. It would supply the rest of the fuel at market prices.

Tullow also had to finalise a “unitisation” deal with its partners in the project, Anadarko, Kosmos, GNPC (the Ghanan State company) and Sabre.

Jubilee is covered by two licences and the partners have different shares in each. According to Mr Heavey, the unitisation deal is designed to balance these differences.

According to a trading statement released yesterday by the company, Jubilee will produce 25,000 barrels of oil a day. Once it goes into production, it will move Ghana into the world’s top 50 oil-producing nations.

Tullow hopes to begin the first phase of development of its interests in the Lake Albert rift basin in Uganda, which has reserves of more than 700 million barrels of oil, early next year.

The company’s project team is reviewing the scale and timing of subsequent stages of development, and it is looking at both the viability of local refining to supply petroleum products to the region and the optimum route to export oil to international markets via a pipeline.

Opec outlook: oil demand to pick up

Opec secretary-general Abdalla El-Badri said he hopes the decline in world oil demand will bottom out this year and pick up afterwards.

The Organization of Petroleum Exporting Countries predicted in its annual world oil outlook yesterday that global crude consumption will increase by 0.5 per cent next year to 84.6 million barrels a day.

“This recession is affecting the short term, but in the longer term it will pick up and we hope the economy will be in good shape in maybe two years,”�

Mr El-Badri said at a press conference in Vienna. “By 2012 this problem will be over and we will go back to normal business.”

Crude futures in fell for a sixth day in New York to as low as $61.39 a barrel. – (Bloomberg)