Ghana Faces Risk of Jubilee Gas Gap in 2017

UK-based Tullow Oil has now stabilised oil and gas production from its Jubilee floating production ship (FPSO) offshore Ghana, following a month-long shutdown in April, it said June 30. But a long-term fix to the FPSO’s turret bearing problem will require the ship to be shut down for 8-12 weeks in 1H 2017, a plan requiring Ghanaian government approval.

Such a shutdown would mean no associated gas from Jubilee for a period of two or three months in 1H 2017 -- a significant disruption to Ghana's gas-fired power sector. Jubilee typically produces 60-80mn ft³/d of gas, supplied to Ghana's market. Tullow though said it is looking at ways to accelerate gas production from its TEN oil and gas development six months early so that it can fill the gap. Tullow says it is hoping for Ghana to approve its plan "in the coming weeks."

Ghana's gas-fired power plants are currently dependent on Jubilee gas. No LNG or Nigerian gas is currently entering the country, and it's uncertain if either will be available later this year.

Tullow noted that its TEN oil and gas development, also offshore Ghana, remains on schedule and budget. It is already “over 96% complete and is expected to deliver first oil within the next three to six weeks.” A gradual ramp-up in oil production towards the TEN's FPSO capacity of 80,000 b/d gross is anticipated around end-2016, although further well drilling is not expected to resume until a Cote d'Ivoire/Ghana border dispute is resolved next year.

Associated gas from TEN will be re-injected into the Ntomme reservoir gas cap until gas export begins, said Tullow. Gas export was originally planned to start 12 months after field start-up, with the Tweneboa gas reservoir coming on stream a further 12 months later. “However, options to accelerate gas export are currently being evaluated as the fabrication of the gas export facilities is ahead of schedule and is expected to be complete in late 2016, some six months early," added Tullow.

TEN development area offshore Ghana (Map credit: Tullow Oil)

Jubilee FPSO was shut for an extended period in April with production resuming in early May. It now expects gross oil production of 85,000 b/d in 2H 2016, plus associated gas.  But the lower than expected Ghanaian production, due to the Jubilee outage, now means Tullow expects 1H 2016 revenues to be $0.5bn, down from $0.8bn in 1H2015, with gross profit of $0.2bn (down from $0.3bn). Net debt at end-June 2016 was $4.7bn, but Tullow said it had renegotiated two debt facilities – including one extended by 12 months out to April 2018.

Tullow also updated investors about east Africa and its planned development of the 750mn bbl South Lokichar oilfield, and plans with partner Maersk and the Kenyan government to build an in-country crude pipeline to the port of Lamu, with tendering for front-end engineering and design beginning in 2H 2016. In April, Uganda decided to build a $2bn, 1,400km oil export pipeline to Tanga in northeast Tanzania -- rather than across southern Kenya as Tullow had hoped

Mark Smedley | www.naturalgasafrica.com