The Chief Executive Officer of Tullow Oil PLC, Rahul Dhir, has lamented the lack of investments in the oil industry.
According to him, this is limiting the production of oil at the Jubilee and TEN oil fields.
In an interaction with the media, he stated that: “Because of a lot of focus on climate change and the need to go into renewables, the investment level in the oil and gas industry has come down. Last year we could’ve increased production in Ghana, especially in the Jubilee Fields because we invested. And that’s how it works globally.”
“If we are not investing, globally the supply will decline and that sets you up for an increase in price. And this is something that we have to watch carefully over the next six to eight months to see whether investments start to come back into this industry on a big scale or not.”
The independent oil and gas exploration and production group, Tullow Oil PLC, which gained US$1,273 million in revenue and made a gross profit of US$634 million for the year ending December 2021, plans to improve on these figures this year.
Rahul Dhir explained to the media how his outfit plans to achieve this goal. This includes investment in new infrastructure and new wells at the Jubilee and TEN oil fields.
“Capital that we spent last year in Ghana particularly was only around drilling wells. A lot of the spending that we’re doing this year is on infrastructure, particularly on Jubilee South East, but also in TEN. So infrastructure will help us increase production. So think about the infrastructure spend as a foundation for a multi-year expansion program.”
Tullow’s 2022 outlook
- Group working interest oil production guidance remains 55 to 61 kboepd based on Tullow’s existing equity interests in TEN and Jubilee. This forecast will be adjusted following completion of the pre-emption of the sale of Occidental Petroleum’s interest in Ghana to Kosmos Energy. The estimated full year impact of the completed pre-emption would be an addition of c.5 kboepd (net) to the Group’s 2022 production forecast, adjusted for completion timing.
- Full year underlying operating cash flow1 guidance remains c.$750 million, assuming $75/bbl for the remainder of the year.
- Full year free cash flow guidance remains c.$100 million assuming $75/bbl for the remainder of the year; year-to-date cash flow positively impacted by oil prices at the start of the year, largely offsetting the one-off impact of a $76 million payment to HiTec Vision in relation to the purchase of Spring Energy in 2013, following an arbitral decision in HiTec Vision’s favour. Material cash flow Tullow Oil Plc- 2021 Full Year Results contribution secured in February with receipt of $75 million contingent consideration following Final Investment Decision (FID) in Uganda.
- Capex of c.$350 million, split c.$270 million in Ghana, c.$30 million for non-operated portfolio, c.$5 million in Kenya, and exploration spend of c.$45 million. Decommissioning spend is expected to be c.$100 million.
- Three new wells at Jubilee and three new wells at the TEN fields planned, including two strategic wells at TEN to further define future development plans, as well as investment in infrastructure for the undeveloped Jubilee South East and North East areas.
- Tullow will self-operate the Jubilee FPSO from mid-2022 onwards, following the scheduled end of the contract with MODEC, enabling the Group to realise further efficiency improvements and cost savings.
- Tullow expects to secure a gas commercialisation agreement in Ghana which will come into effect once all foundation gas volumes have been delivered; this is forecast to occur before year-end.
- In Kenya, a revised Field Development Plan was submitted in late 2021 and discussions are progressing with potential strategic partners.
- In mid-2022 Tullow will participate in the Repsol operated Beebei-Potaro well, which is a follow-up to the Carapa light oil discovery made in 2020 in the Kanuku licence, offshore Guyana.
- Work plan in place to progress towards Net Zero target, focusing on gas compression facilities on the Jubilee FPSO; MOU signed with the Ghana Forestry Commission to identify and develop nature-based carbon offset projects in Ghana to offset hard to abate and residual emissions.