Friday 9 December 2016

Tullow watches costs as it restarts Kenya drilling, says Heavey

Paul Burkhardt

Published 02/11/2016 | 02:30

Tullow Oil boss Aidan Heavey
Tullow Oil boss Aidan Heavey

Tullow Oil is getting "back to exploring again" and is looking for opportunities in all African basins, ceo Aidan Heavey has said.

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He told an industry conference in South Africa that Tullow Oil plans to reduce its net debt to $3.7bn (€4.09).

The company will restart exploration and appraisal drilling at Kenya's prolific South Lokichar field next month where it saw an upside potential of over a billion barrels of recoverable oil.

According to Heavey, the cost of oil working in Kenya is $25 to $30 per barrel, including capital spending, operating costs and tariffs.

"There's nothing like that around the world," he said.

Heavey has said previously that producers including Tullow must adapt to a market where oil prices will remain lower over the longer term.

Irish-founded, UK-based, Tullow Oil, has its main production assets in Ghana, and also has African exploration acreage in Mauritania, Namibia and Zambia.

The focus on Kenya comes after Tullow said over the summer that its exploration spend will rise again to about $250m (€276m) a year from 2017, but warned that off-shore exploration remains prohibitive while oil prices remain depressed.

Regarding Kenya, "a recent 3-D survey shows additional upside potential," Tim O'Hanlon, vice president for Tullow Oil's Africa business said at the same conference.

Mr O'Hanlon said in Uganda, where it has 1.7 billion barrels of oil to develop, Tullow Oil is targeting an export pipeline capable of taking 200-230,000 barrels a day to Tanga port in Tanzania.

Front-end engineering and design of the pipeline will start next year and a final investment decision is expected to be made in 2018.

(Bloomberg with additional reporting by Reuters)

Irish Independent

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