Tullow to stand with Africa on oil and gas investments

Tullow Oil says it will continue operations in Africa despite plans by other operators to shift from the continent. The Anglo-Irish Oil and gas operator has over 30 licenses across eight countries in Africa and South America.

It was once the lead investor in Uganda’s operation before it sold its stake in the Lake Albert region.

With the talks about the shift to cleaner energy operations, some investors in oil and gas operations are cutting investments in Africa’s oil and gas developments.

But Tullow Oil plc Chief Executive Officer, Rahul Dhir notes that while the oil and gas industry is in flux, it will take advantage of the opportunities to continue oil and gas developments in Africa.

“There can be no doubt that our industry is in flux as many major companies in the oil and gas sector seek to shift their focus away from Africa. As a responsible operator with a long history in both West and East Africa, Tullow is uniquely positioned to benefit from the opportunities presented by this period of flux” said Rahul Dhir in a statement

“The Board and I are determined that Tullow takes advantage of those opportunities as they appear, and we would not be able to do this without the hard work that we have undertaken over the past two years to address the issues our company faced,” he added

Several oil and gas companies have already set net-zero emissions targets. Despite the current economic challenges, many are sustaining efforts to decarbonize their operations and their value chains.

Similarly, Tullow plc pledged in March 2021 to reach Net Zero on its scope I and II emissions by 2030.

“We are making good progress on this pledge, having committed capital to decarbonisation projects on TEN and Jubilee as we seek to eliminate routine flaring by 2025, and having signed a memorandum of understanding with the Ghana Forestry Commission to jointly investigate afforestation projects in Ghana as part of our carbon offsetting programmes.” reads part of the  statement to Tullow’s stakeholders

The company in February received $75 million about the sale of its assets in Uganda to Total in 2020. February 2022 has triggered a contingent consideration of $75 million about Tullow’s sale of its assets in Uganda to Total in 2020.

While Tullow had technically exited Uganda, it said it will continue to have exposure to the Tilenga Project through additional cash consideration in the form of contingent payments depending on the average annual Brent price once production begins.

Tullow maintains operations in Kenya but Rahul Dhir reports that plans to farm down or shed some interest in South Lokichar basin blocks are in high gear.

“We expect to sustain production in our non-operated assets and we are seeking to farm down some of our equity in Kenya to a strategic partner. We are making good progress with this farm down and we continue to work closely with the Ministry of Petroleum and Mines to secure FDP approval. We believe that Project Oil Kenya can generate material, long-term value which will complement our portfolio in West Africa and diversify our business.” he said

According to Dhir, Tullo and its Joint Venture Partners agreed to revise the development plan for the operations in Kenya.

“Our new plan targets more resources to deliver higher productivity and significantly reduces the project unit costs,” he said

Oil and gas companies were badly hit by the COVID-19 lockdown. The situation is being worsened by the need to transition to cleaner energy sources.

Projects like the East African Crude Oil Pipeline (EACOP) are faced with negative publicity at regional and international levels for environmental concerns.

Some have been forced to renegotiate the agreements with the governments or within Joint ventures.    In Kenya, Dhir revealed that the plan has been restructured from a commercially difficult project into an investible opportunity.

“And we are working with potential strategic partners to reduce our stake in the project to be more in line with a company of our size” read part of the statement.