Tullow oil the operator Jubilee and TEN has since 2007 shown an unalloyed support towards oil and gas exploration and exploitation in Ghana, The company and its Partners were responsible for historic Ghana first major oil production.

In November 2010, following a successful development programme, which included the building of a Floating Production Offtake Vessel (FPSO), first oil was achieved from the Jubilee field.

Jubilee Field

The start-up of Tullow production from the Jubilee South East project in July was a landmark event, marking a step change in the field’s production with average daily rates 30% higher in the second half of the year compared to the first half with rates reaching levels over 100 kbopd. The company has recorded a decline in its gross oil production from the Jubilee field averaged 83.4 kbopd (32.5 kbopd net) in 2023.

The above oil production was below Tullow expectations and this was primarily blamed on two issues; the water injection reliability challenges and Jubilee South East starting up slightly later than planned. The water injection reliability issues were resolved in the fourth quarter of 2023, with upgraded capacity delivering record water injection rates and observable pressure response in the reservoirs, which will benefit 2024 production and beyond.

Jubilee gas processing was also upgraded in 2023 and as a result, Tullow had increased capacity to produce oil from wells with higher associated gas content. These important facility upgrades put the company in a strong position to maintain production in the range of 90-110 kbopd towards the end of the decade.

TEN Field

The gross oil production from the TEN fields averaged 18.4 kbopd (net: 10.1 kbopd) during 2023 operational year, with improved pressure support from existing injection wells resulting in better management of decline.  A planned shutdown was carried out in July and work was completed to improve asset integrity, enhance production through improved liquid recovery from gas and reduce flaring.

Gas flaring from TEN was reduced by over 50% owing to the operational shutdown of the well and this was done as an important step forward in the company’s target to eliminate routine flaring by 2025.

 Cost and Effect

Also during the year 2023, Tullow operational performance had been continued to strengthen and average uptime across Ghana FPSOs which remained high at 96%. The company drilling team also had excellent performance with seven wells (four Jubilee producers and three Jubilee water injectors) brought onstream during the same under review. The cost of drilling wells in 2023 was on average around 20% lower and 38 days faster than the previous campaign in 2018-2020, achieving top-quartile industry performance.

These cost savings and efficiencies have been driven by reducing non-productive time, improved well design and more effective contracting. Five new Jubilee wells (three producers and two water injectors) are scheduled to come onstream in 2024. The first water injector was brought on stream in January, and two producers were brought on stream in February, with gross production currently averaging over 100 kbopd.

Tullow Outlook

Tullow is expected to complete its current drilling programme in Ghana around the middle of the year 2024 which is approximately six months ahead of schedule and this will be followed by a drilling break in Ghana with plans to resume drilling in 2025.

 According to Tullow, during this period the company will strategise plans to optimise its next phase of investment in Ghana while the existing well stock and upgraded water injection capacity sustains production at Jubilee and TEN as decline continues to be effectively minimised through improved pressure support.

Gas Monetization

 Net gas production in Ghana averaged 6.4 kboepd in 2023 and marked the first commercialisation of associated gas from the Jubilee field. The interim Gas Sales Agreement, initially valued at $0.50/mmbtu, was amended in July 2023 to a price of $2.90/mmbtu and subsequently increased in November to $2.95/mmbtu, after applying year-on-year inflation indexation.

The agreement represents a revenue stream for Tullow of $4 million per month. During the year, discussions are continued with the Government of Ghana on the amended TEN Plan of Development (PoD) and the long-term gas sales agreement.

The company has remained committed in reaching agreement and progress of a number of identified projects at TEN fields in addition to commercializing the material gas resource base.

Disputes and Resolutions

In February 2023, Tullow Ghana Limited (TGL) announced that it had filed requests for arbitration with the International Chamber of Commerce in London in respect of two disputed tax assessments received from the Ghana Revenue Authority (GRA).

The assessments relate to the disallowance of loan interest deductions for the fiscal years 2010 – 2020 and proceeds received by Tullow Oil plc during the financial years 2016 to 2019 under the Group’s corporate Business Interruption Insurance policy.

Tullow had also previously filed a request for arbitration in respect of a separate assessment for Branch Profits Remittance Tax of $320 million in 2021. A hearing in respect of this dispute took place in October 2023 with an outcome expected this year.

The company believe that resolution through international arbitration will bring certainty, which is in the best interest of all stakeholders. In the meantime, Tullow will continue to engage with the Government of Ghana, including the GRA, with the aim of resolving these disputes on a mutually acceptable basis.

In March 2022, Tullow completed the pre-emption related to the sale of Occidental Petroleum’s interests in the Jubilee and TEN fields in Ghana to Kosmos Energy for a total consideration of $126 million. The transaction took Tullow’s equity interests to 39.0% in the Jubilee field and to 54.8% in the TEN fields.