Tullow Oil, Europe's largest independent oil explorer by market value has secured the deals it needs with its partners and the Ghanaian government to begin the development of its oil finds in the country.

Tullow said it was on track to begin producing oil from its Jubilee One licence area off Ghana’s coast in the second half of next year.

Chief executive Aidan Heavey told The Irish Times and the Financial Times in separate interviews that the company was likely to begin production in the fourth quarter of 2010.

Jubilee is primarily an oil well, but is also likely to produce some natural gas. The company has agreed to sell this gas to the Ghanaian governmemnt, but will give out the initial 200 billion cubic feet (bcf) of gas for free.

Mr Heavey said the government intended building a gas-processing facility and the company wuold aid it in that direction. It would also supply the rest of the fuel at market prices.

Tullow also had to finalise a “unitisation” deal with its partners in the project, Anadarko, Kosmos, GNPC and Sabre.

Jubilee is covered by two licences and the partners have different shares in each. According to Mr Heavey, the unitisation deal is designed to balance these differences.

Speaking to the Financial Times, Mr Heavey said the firm had been acquiring licences for areas showing similar geological patterns to the Jubilee field in Ghana.

He said the company planed to extend its position in the region, drilling two more wells to reveal more about Jubilee, two more on other prospects in Ghana, and one in neighbouring Cote d'Ivoire.

Tullow has also acquired licences in Sierra Leone and hopes to soon secure more in the area, the FT said.

Tullow said its Jubilee Phase One development remained on track for first oil in the second half of 2010 and that it has finalised the development plan with the Ghanaian government.

The field is scheduled to start pumping oil at a rate of around 120,000 barrels per day (bpd), rising to around 250,000 within two years. The entire field was valued at around $15 billion.

It also said the Tweneboa-One well made a significant discovery, extending the Jubilee play westwards.

Last Tuesday, the company said it expected commercial reserves to double by 2011 after recent exploration successes in Ghana and Uganda.


Source: Reuters