Tullow And Partners Invest Close To $19bn In Ghana Since Commercial Production Started In 2010

Tullow Oil, together with its partners, have invested close to $19 billion in Ghana since commercial oil production started in 2010.

The company has also disclosed that it has delivered $6 billion in revenue to government in the same period.

This was contained in a statement issued by Tullow Oil Ghana after the company took its turn at the Ghana Stock Exchange “Facts Behind The Figures”.

Managing Director of Tullow Ghana, Wissam Al- Monthiry said the company is committed to investing in Ghana to grow the economy.

“Over the years, we have contributed significantly to Ghana’s economic growth. We have supported the communities in which we operate and made dreams come true for many in the country”, he said.

He stated that Tullow has demonstrated tremendous commitment to helping the country achieve its economic development.

“It speaks to the consistency of our commitment to build a better future for our host country through responsible oil and gas development.

We see great potential in our existing assets and with timely support from key stakeholders, we can deliver even greater benefit to the people of Ghana”, Mr Al- Monthiry said.

Tullow Oil’s commitment to Ghana

The UK-based multinational oil and gas company, currently operates the two main oil fields in Ghana – Jubilee and TEN.

Currently Tullow’s key partners in Ghana are Kosmos Energy, Ghana National Petroleum Company (GNPC), Petro SA and Jubilee Oil Holdings Limited (JOHL).

Tullow and its partners, invested in the southeast side of the Greater Jubilee field, increasing production capacity of the field from 70,000 to 100,000 barrels-per-day

“The success of the Jubilee South-East project affirmed the partners’ conviction to continue investing in existing assets, rather than shifting focus elsewhere”, the company said.

Tullow Oil’s 2023 Financials

The company’s full year 2023 results, released in March 2024 revealed that it delivered $170 million in free cash flow last year, ahead of a $150 million projection.

Tullow’s current market capitalization is $410 million and expects to generate $800 million in free cash flow over the 2023- 2025 period.

Group Finance Director, Richard Miller, speaking at the same session, said Tullow’s 2023 full year results indicates that the company’s strategy to focus on debt reduction, grow production and deliver free cash flow, is beginning to yield good results

Ghana Stock Exchange on Tullow

The Managing Director of the Ghana Stock Exchange Abena Amoah described Tullow as a strategic member of the exchange and has over the years, contributed significantly to deepening the market’s capitalization and diversification.

“We look forward to forging a greater partnership with the company in the years to come”, she said.

Madam Amoah noted that “we are witnessing interesting times with new and potential listings underway”.

After experiencing a steady rise following the COVID-19 lockdown, domestic air travel witnessed a notable decrease in passenger traffic in 2023, marking the first decline in three years.

According to data from the Ghana Airport Company Limited (GACL), domestic passenger travels totalled 775,662 in the year under review, down from 852,101 in the previous year 2022, marking a 9.9 percent decrease.

Despite the positive outlook projected by regulators and industry experts, domestic flights from Accra to the five main domestic airports – Wa, Tamale, Kumasi, Sunyani and Takoradi – experienced a shortfall of about 76,439 passengers.

At the start of 2023, industry experts anticipated that the domestic aviation sector would maintain a strong growth path, signalling a complete recovery from the lingering impacts of the COVID-19 pandemic, which led to a lockdown in 2020.

Reconciled statistics from both the Ghana Airports Company Limited (GACL) and the Ghana Civil Aviation Authority (GCAA) reveal that domestic passenger flows surged from 423,718 in 2020 to 722,721 in 2021 and further to 852,101 in 2022, marking the highest figures since 2013.

Last year, however, witnessed a decrease of over 76,000 in passenger traffic.

Upon further examination of domestic throughput figures, the 2022 record high of 852,101 passengers represents an increase of over 101 percent compared to the 423,718 travels recorded in 2020. Additionally, it reflects a 23 percent rise from the 690,314 passengers seen in 2019, which was before the pandemic.

The statistics also showed that international travel in 2023 increased from 1.8 million in 2022 to 2.1 million, marking a rise of approximately 15.8 percent.

Reasons

The decline in domestic travel has been linked to a single economic factor: the duopoly of operators, AWA and Passion Air; which are accused of artificially limiting supply to raise prices. The open market nature of the industry limits the regulator’s ability to control prices.

Experts suggest that the decrease in available seats enabled operators to increase prices by artificially limiting supply. For instance, average fares in USD terms rose by almost 50 percent compared to 2019 figures.

International aviation expert Sean Mendis clarified that while the total number of passengers decreased, there was a more significant reduction in the market’s available capacity. This indicates that both AWA and Passion Air decreased the number of seats available for purchase in 2023 compared to 2022.

“The market is easily spilling around 30 percent of demand due to insufficient capacity being offered by the two incumbents. If they can add more seats for sale or a new player enters the market, the market will grow; and if they don’t, it will stagnate or shrink.

“The demand was probably higher because the average number of seats filled on each flight was increased from 2022 – but the capacity shortage caused the whole year figures to be below 2022 record highs,” he said.

Pricing

Mr. Mendis reiterated that the decline is not due to a decrease in demand; the domestic travel market has remained robust. Instead, it highlights the need for providers to offer their product at the appropriate price point to meet consumer demand.

He clarified that Ghana stands out as the only country globally with over 500,000 annual domestic passengers, showing consistent growth in 2021, 2022 and 2023. Therefore, despite the decline in 2023, the domestic market remains robust and healthy.

Previous years’ performance

At the start of 2023, Rev. Stephen Wilfred Arthur, the Director overseeing Economic Regulation and Business Development at GCAA, credited the observed growth to various factors. These included the establishment of the National Air Transport Facilitation Committee (NATFC), which improved aircraft and crew, passenger, mail and cargo facilitation at Kotoka International Airport (KIA), thereby enhancing the overall passenger experience.

Other factors included the availability of healthy competition among airlines, stimulating new entrants to the domestic market, and eliminating monopolies on the regional and international routes.

He emphasised that ongoing enhancements in passenger experience at Kotoka International Airport and other domestic airports, such as improved facilities in Tamale and Kumasi, along with prompt resolution of passenger complaints, were vital for facilitating the recovery process.

Way forward

The regulator holds the duty to ensure airlines are adequately funded to maintain safety in the local market. However, current conditions allow new entrants or additional capacity to swiftly join the market. While consumers may feel slighted, experts argue that the situation could worsen if airlines were to go bankrupt and cease operations altogether.