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.
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.
