Tullow Oil to resume drilling in Ghana after resolving dispute
Border disagreement with Ivory Coast had halted expansion of key field for two years
Tullow Oil is preparing to resume drilling in Ghana after the resolution of a maritime border dispute with Ivory Coast that has halted expansion of an important new field for two years.
An international tribunal declared on Saturday that the sovereign rights of Ivory Coast had not been violated by Tullow’s development of oil and gas fields in Ghanaian waters close to the two countries’ border.
The ruling clears the way for UK-listed Tullow to resume development of the Tweneboa, Enyenra, Ntomme fields, collectively known as Ten, which have been operating below their potential capacity since starting production last year.
Tullow said it expected to resume drilling around the end of this year, allowing the opening of additional wells that would increase production towards its target for 80,000 barrels per day, 60 per cent above the current level of about 50,000 barrels.
The Ten fields, 45km off Ghana, have been the focus of a long-running dispute with Ivory Coast, which claimed some of the resources were in its waters.
This has created uncertainty for Tullow investors because Ten accounts for about 30 per cent of the company’s production and its rights to some of the oil would have been thrown into doubt had Ivory Coast won the case.
Tullow took a risk by pressing on with the $4bn development in defiance of objections from Ivory Coast but the company was barred from drilling further wells in 2015 until international arbitrators reached a decision.
The International Tribunal of the Law of the Sea, the intergovernmental organisation overseeing maritime law, unanimously rejected Ivory Coast’s claims.
Tullow said the Ten fields, which have estimated reserves of 300m barrels of oil and oil equivalent, had been confirmed to be laying wholly within Ghanaian waters.
It would “now work with the government of Ghana to put in place the necessary permits to allow the restart of development drilling”.
“While the Ten fields have performed well during the period of the drilling moratorium, we can now . . . take the fields towards their full potential,” said Paul McDade, Tullow chief executive.
Tullow investors will hope the ruling marks a turning point after a turbulent few years during which the company incurred heavy debts developing Ten in the teeth of a brutal downturn in oil prices.
The company pioneered the opening of Ghana’s oil and gas reserves with development of the Jubilee field, 20km east of Ten, which came onstream in 2010.
Jubilee has also experienced production setbacks after suffering damage last year to the floating production vessel that serves the field. A permanent fix to the problem is not due to be completed until 2019.