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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