Nov 27 | 2018
Paul McDade, CEO of Tullow Oil, Lead Sponsor of Africa Oil Week 2018, spoke to us about his company’s roots and ambitions for Africa
Our business is rooted in Africa. Tullow was founded in 1985, and our first production of any kind – gas production – began in Senegal in 1987. That was the same year that Tullow listed on the London and Irish Stock Exchanges. In 2004 we acquired Energy Africa – marking a transformation for Tullow in terms of our size and ambition. This was the start of a multi-billion investment in acquiring, appraising and developing oil and gas fields in Africa. Since then we have been instrumental in opening an oil and gas industry in three African countries, Ghana, Uganda and more recently Kenya. Almost 100 per cent of our production (and therefore revenue) comes from Africa, and currently we are progressing the development of our discoveries in Uganda and Kenya. Africa is core to our strategy to build our reserves, resources and future production through geographies and geologies that we know well, so Africa represents Tullow’s past, our present and our future.
Future for Africa
In the past ten years, Africa saw a rapid increase in its share of global oil production, although this has contracted somewhat. Last year Africa produced nine per cent of the world’s total, or eight billion barrels of oil. The continent boasts 7.5 per cent of the world’s proven oil reserves and 7.1 per cent of proven gas reserves. Impressive statistics. While these figures haven’t changed a great deal in the last few years, in 2013 six of the top ten hydrocarbon discoveries were made in Africa. Last year it was just one. As you are probably aware, oil and gas exploration activity has been at a record low recently. Challenges remain, like regulatory uncertainty, financing costs, foreign currency volatility, and of course pricing/global supply dynamics and investor sentiment are key issues influencing the future for African Governments and oil companies alike. We think there are considerable opportunities in Africa and the outlook over the short-to-medium term is positive. Now is the time for oil companies and African Governments to find new ways of working together, and of directing some of those investment dollars back to the continent.
Benefits for Africa
The obvious benefits are revenues – through production sharing, but also taxation – opportunities for local companies to supply our industry and of course direct job creation. Then there is the capacity building and training that comes with these opportunities, and an uplift in standards, such as health and safety. These help local companies to increase their eligibility to win contracts from the oil industry, but also to attract investment and partnerships from other sectors. Tullow recognises that hydrocarbon discoveries, of the scale ourselves and others have made, have the potential to make a significant and positive contribution to the economic development of a country. The word ‘significant’ is important as the scale of the investments we make and revenues we hope to generate have the power to completely transform economies, this is rare for any industry. This has made it very important for oil companies to align and work with government to focus on how to maximise the benefit of what is a finite resource for all stakeholders.
Tullow is focused at the moment on our Kenyan operations in Turkana, where we’re looking to commercialise the resources we have discovered through a phased development of the basin, including a central processing facility and an export pipeline to the Kenyan coast. We’re targeting a final investment decision in 2019, and first oil for 2021/22. In the meantime, we have recently begun trucking crude oil to Mombasa as part of an early oil pilot scheme. However, we are also investing heavily in incremental development wells to increase production at both our TEN and Jubilee developments in Ghana.
Tullow today has a balanced portfolio of young, long-life, high margin assets. This portfolio was created by putting Ghana, Uganda and Kenya on the African oil map by very substantial first mover exploration success. In Ghana, we operate two FPSOs currently delivering ~160kbopd, with current investments aiming to take this closer to 200kbopd. Jubilee was our first producing asset offshore Ghana in 2010, then in 2016 we brought the TEN facility on line. Jubilee marked Tullow’s first deepwater operatorship, so it was an incredibly important test of our ability to deliver, and we developed the field in 40 months - a record at the time. Now that both Jubilee and TEN are producing, we are preparing for a multi-year incremental drilling programme to maximise and sustain oil production and gas exports. It’s a multi-year commitment, but we’re in this for the long run.
Tullow Oil & Africa Oil Week
Tullow Oil, Africa’s leading Independent Oil Company, returns in 2018 as the Lead Sponsor of Africa Oil Week, and we are delighted to welcome them as we celebrate our 25th Anniversary.
“Africa Oil Week is the most important event of our year. We’re committed to the future of African oil and gas, and we’re excited to come together in 2018 with a great list of leading companies, exhibitors and speakers focused on helping deliver Africa’s full potential.” – Paul McDade