Tullow to drill three wells
…in new oil search in Orinduik Block
…pumping US$80M into programme
UK-BASED oil company, Tullow Oil plc, is injecting US$80M to drill three wells offshore Guyana, the company’s spokesman, George Cazenove, disclosed during an exclusive interview with Guyana Chronicle on Wednesday.
Tullow Oil, parent company of Tullow Guyana B.V., is a leading independent oil and gas exploration and production company, which has interests in 90 exploration and production licences across 16 countries that are in West Africa, East Africa and ‘New Ventures’, which includes Guyana and French Guiana.
Cazenove said Tullow Oil returns to drill offshore Guyana after an unsuccessful drilling exercise with Repsol in 2012. He said the first of the three wells – Jethro – will be drilled in the Orinduik Block in June, 2019 using the Stena Forth Drillship which is currently operating in Ghana. It was explained after a period of 30-45 days, the results would be available. Stena Forth will then proceed to drill the Joe well also in the Orinduik Block. The Carapa well, however, will be drilled in the Kanuku Block later in the year by Repsol.
“There are three wells, they are very exciting for us, we are excited about their potential but they are exploration wells. There are absolutely no guarantees,” the Tullow Oil Spokesman said. The drilling exercise is being conducted following 3D seismic operations in the Orinduik Block were completed in September 2017.
With U.S oil giant ExxonMobil putting its gross recoverable resource estimate to more than 5.5 billion barrels of oil equivalent in the Stabroek Block in Guyana, Cazenove said is cognizant of the country’s potential.
“We know the potential of Guyana; we have seen what Exxon has done, we are obviously impressed with what they have done and see that potential but I think it is important to realize that the wells that we are dripping this year they are exploration wells,” he said.
According to a Production Sharing Agreement (PSA) signed between the Government of Guyana, Tullow Guyana B.V and Eco (Atlantic) Guyana Inc, the country could benefit from as much as 60 per cent in oil profit, including a one per cent royalty once the explorations are successful and the companies start pumping for oil in the Orinduik Block.
However, Cazenove said Tullow is taking it one step at a time, noting that its next action is dependent on the results of the explorations. Last Friday, an Order was laid in the National Assembly to give Tullow Guyana BV and Eco (Atlantic) Guyana Inc a number of tax exemptions.
Meanwhile, according to the Petroleum Contract, which was signed on January 14, 2016, once the recoverable costs have been satisfied, the profit will be shared between the government and the contractor for each field, based on an established system. This could see Guyana receiving a profit share as high as 60 per cent and as low as 50 per cent. For the first 25,000 barrels of oil, Guyana is in line to receive a profit of 50 per cent. For the next 25,000 barrels, the country’s profit would increase to 52.5 per cent and 55 per cent for the next 15,000 barrels. For the subsequent batch of 15,000 barrels of oil, Guyana would benefit from a 57.5 per cent profit and 60 per cent profit for more than 80, 000 barrels of oil. The profit will be shared between the government and contractor on a monthly basis.
According to Article 15:06 of the Petroleum Agreement, a one per cent royalty is included in the government’s share of profit. “The government’s share of profit oil specified in Article 11 includes royalty payable by the contractor at the rate of one per cent of crude oil produced and sold, and delivery to the minister, pursuant to Article 14 of his share of profit oil equivalent to royalty shall constitute payment of such royalty in kind,” the agreement states.
The agreement also provides for associated gas produced from an oil field within the contract area to be used for the purposes of the operations of production and production enhancement of oil fields, such as gas injection, gas lifting and power generation.