Lo­cal con­tent has to be a pri­or­ity

The Africa Report - - COUNTRY FOCUS -

The head of Tul­low’s Ghana op­er­a­tions, buoyed by the oil price, looks ahead to a new li­cens­ing round and the drive to­wards do­mes­ti­cat­ing the in­dus­try

In Septem­ber 2017, t he In­ter­na­tional Tri­bunal for the Law of the Sea drew a line in the ocean sands : end­ing a long-run­ning dis­pute over the rights to un­der­sea oil be­tween Côte d’ivoire and Ghana, the tri­bunal ruled in favour of Ghana. “It meant that we could re­sume drilling – for two and a half years we had done no drilling,” says Kweku Awotwi, the manag­ing di­rec­tor of Tul­low Ghana, who was ap­pointed on 1 March 2018. Awotwi joined the com­pany from the Volta River Author­ity and has worked across the power, en­ergy and min­ing sec­tors. The tri­bunal de­ci­sion has meant a sharp uptick in the pace of ex­plo­ration, and Tul­low has drafted in a sec­ond drilling rig. Given the needs of the Ghana­ian trea­sury, all par­ties are happy. That also puts the com­pany in a good po­si­tion for the oil-li­cens­ing round in 2019.

TAR: Would you have taken an­other rig had oil prices been at $45 per bar­rel? KWEKU AWOTWI: We would not. There was a case we could make at $55 or $60 at the be­gin­ning of the year, but by bring­ing on a rig you’re spend­ing $60m-$70m for a well. And your cash flow bet­ter be able to sup­port that. So higher oil prices have def­i­nitely made the bring­ing on of a sec­ond rig a much more at­trac­tive eco­nomic ven­ture.

How of­ten do you re­view these kinds of cap­i­tal ex­pen­di­ture de­ci­sions? There was a dis­cus­sion about the pos­si­bil­ity of bring­ing in a sec­ond rig as part of the 2018 bud­get. But it was put in the con­tin­gent fund bucket. So there was a thought that we could pos­si­bly mo­bilise a sec­ond rig, but it would have to de­pend upon oil prices. So it’s not some­thing you do week by week. We did pro­vi­sion for it, con­di­tions trig­gered, and we were able to act.

What kind of oil price are you bud­get­ing for in 2019? I’m not sure it’s fi­nalised, but I sus­pect it’s around $70-$75. I think the only guid­ance one could have is what the for­ward mar­kets are do­ing. Right now the for­ward mar­kets are fairly bullish.

What are your ex­plo­ration plans? If we’re talk­ing about Ghana, Tul­low is very keen to de­velop what we call the near-field ar­eas, which are close to ex­ist­ing in­fra­struc­ture that we may not have rights to. So that’s some­thing that we are pur­su­ing quite dili­gently. And then, of course, we’ve also sig­nalled that we’re go­ing to par­tic­i­pate in the newly an­nounced li­cens­ing round. There are about five or six blocks in the western part of the coun­try that are go­ing to be up for this li­cens­ing round. I think the ap­pli­ca­tions will be put in some time early next year.

Given your time at the Volta River Author­ity, what’s your per­spec­tive on the state of the wider en­ergy mar­ket in Ghana? Do you think that the pinch points of the past, par­tic­u­larly

Kweku Awotwi Manag­ing di­rec­tor, Tul­low Ghana

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