Tullow Launches Deepwater FPSO Despite Glut

Posted by Joseph Keefe
Thursday, January 21, 2016

Tullow not for sale but could be take-over target - COO.

Amid one of the deepest oil price crashes in history, Britain's Tullow Oil is sending one of the world's biggest floating deep-water oil production platforms to West Africa to pump crude for at least 20 years.

The 340-metre long production vessel, named after late Ghanaian president Prof John Evans Atta Mills, was converted in Singapore from a Very Large Crude Carrier (VLCC) super-tanker, and is expected to set sail this weekend to Ghana, where it is scheduled to gradually ramp up production from the TEN deepwater oilfield from July/August this year, the company's chief operating officer Paul McDade said on Thursday.

With costs (operating plus capital expenditure) of around $20 per barrel and an expected production life of 20 years or more, London-listed and Africa-focused Tullow hopes it can weather a storm which has seen crude prices tumble over 75 percent in 18 months to under $28 per barrel, levels not seen since 2003.

Despite its low production costs, McDade said the current downturn was causing the industry huge pain, and he added that he didn't expect a sharp rise in oil prices as happened in 2009 after the last crash during the global financial crisis.

"It feels more like a 1986 than a 2008. It's a more fundamental shift. 2008 was a financial crisis, today is very different. We have oversupply, that's structural and takes longer to adjust to," he said in reference to low oil prices in the decade following the price crash of 1986.

Despite the outlook for excessive global output, McDade said the John Evans Atta Mills Floating Production, Storage and Offloading (FPSO) vessel was going ahead as scheduled.

"We are very much on schedule for a July/August gradual start of production. The aim is to hit peak production in early 2017," McDade told Reuters in Singapore.

The TEN oilfield off the coast of Ghana lies at a water depth of 1,000-2,000 metres and has a maximum capacity to produce 80,000 barrels per day (bpd) of a light sweet crude quality close to Brent, although Tullow said it plans to average only around 50,000 bpd at peak production.

Tullow already produces similar grade crude from the offshore Jubilee oilfield, also in Ghana, and the company said once TEN and Jubilee were at full production, combined output would reach 100,000 bpd in early 2017.

In the midst of a huge production overhang, which sees 1-2 million barrels of crude pumped every day in excess of demand, West Africa is one of the few regions that is expected to see production increases and further investment this year.

Analysts at AB Bernstein said on Thursday they expected "Africa ... as the most active basin in 2016," in terms of developments and investments of potential offshore projects.

"In Ghana, we're kind of blessed with high quality, low cost assets," McDade said.

He said that Tullow's overall cash operating costs were around $15 per barrel.

TAKE-OVER TARGET?
Because of the low prices, McDade said Tullow would have to be flexible with its next investment decisions, including expansion of the Jubilee field, which Bernstein estimated to see a final investment decision (FiD) in the second quarter of 2016.

He also said the firm would only develop its East African oil assets in Uganda if it managed to farm out a significant part of its production in order to re-invest the money made from such a sale back into those developments.

"Ideally, you'd want to invest in the current environment as services are cheap and likely to become cheaper still. In the last 8-10 years we may not have seen a better time to invest than now," McDade said but added this would depend on Tullow's financial and equity position.

Tullow's share price has fallen by around 70 percent over the last year, giving the company a market capitalization of less than 2 billion pounds.

The firm's low share price and market capitalisation meant that Tullow was potentially a take-over target.

"As a smaller company, you're always going to be a take-over target," he said but added that Tullow was not up for sale and warned any bid would also be challenging as its partnerships in Africa would entail clearances from regional governments.

Despite this optimism, ship builders and industry analysts are less enthusiastic about the immediate future for other new floating deepwater production vessels.
 

By Henning Gloystein

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter June 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Brexit will Affect Maritime Talent

The UK’s decision to leave the EU has the potential to drive many of its maritime employees away, according to the results of a survey issued by Faststream, a recruitment specialist in Maritime jobs.

“Twiggy” Baker Wins BWT Puerto Escondido Challenge

Grant “Twiggy” Baker (ZAF) claimed victory today at the Puerto Escondido Challenge, besting a field of 24 of the world’s best big wave surfers in towering 20-to-35

Winners of International Seafarers' Welfare Awards

The winners of ISWAN's International Seafarers' Welfare Awards 2016 were announced on 24th June at a high-profile ceremony held in Manila, the Philippines. The

Contracts

ABP orders Two Gottwald cranes

Terex Port Solutions (TPS) has received an order from Associated British Ports (ABP) for two electric Terex Gottwald Model 8 portal harbour cranes in the G HSK 8424 B four-rope grab variant.

POSH Bags Shell FLNG Contract

Singapore’s offshore marine services provider PACC Offshore Services Holdings Ltd. (POSH) has been awarded a contract to support Shell’s Prelude floating liquefied

Baltic Index up for Third Straight Session

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Friday, for a third straight session, on rising demand across all vessel segments.

Shipbuilding

Austal Delivers LCS 8 to US Navy

Austal Limited (Austal) (ASX:ASB) delivered the future USS Montgomery (LCS 8) to the U.S. Navy, during a ceremony held aboard the ship at Austal USA’s shipyard in Mobile, Alabama, USA on 23 June.

Conrad Shipyard Forms LNG Business Unit

Conrad Shipyard has formed a new business unit focused on LNG projects.   Conrad, builder of North America’s first LNG bunker barge scheduled for 2017 delivery,

Prince Charles Places Final Section of UK Aircraft Carrier

The second of the largest warships ever built for the U.K. Royal Navy, the Queen Elizabeth Class carrier HMS Prince of Wales, was given the royal seal of approval when HRH The Prince of Wales,

News

MPA to Enhance Collaboration with Rotterdam Port

Chief Executive of the Maritime and Port Authority of Singapore (MPA), Andrew Tan, attended the second Port Authorities Roundtable (PAR) in Rotterdam.    Hosted

Day of the Seafarer: Ban Spotlights Sustainable Agenda Targets

Marking the Day of the Seafarer, United Nations Secretary-General Ban Ki-moon highlighted the role of the shipping industry in moving forward the international

“Twiggy” Baker Wins BWT Puerto Escondido Challenge

Grant “Twiggy” Baker (ZAF) claimed victory today at the Puerto Escondido Challenge, besting a field of 24 of the world’s best big wave surfers in towering 20-to-35

Logistics

Uncertainity Plagues Seaborne Iron Ore Shipments

Chinese iron ore imports account for around two thirds of global seaborne iron ore shipments, making it the key driver of Capesize employment. Clarksons Research Report.

More PPPs Needed to Enhance Dubai Maritime

The Marine Advisory Council has met to discuss the best ways to continue leading the march to excellence pursued by the Dubai Maritime Authority in upgrading the

210 Ships Pass Through Suez Canal Last Week

Suez Canal traffic data revealed that 210 ships transited the canal, with a total load of 12.8m tonnes, from 19 to 23 June.   An average of 42 ships transited the canal per day during that period,

Mergers & Acquisitions

Will Maersk Line acquire HMM

There are rumours among observers that the  market leader Maersk Line is planning to acquire South Korea’s shipping major Hyundai Merchant Marine (HMM).   Neither

HCI Capital Renamed Ernst Russ AG

A vote was passed at the ordinary shareholders’ meeting of HCI Capital AG yesterday to change the company’s name to Ernst Russ AG. The Executive Board and Supervisory

OSG Joins NYSE "Big Board"

Overseas Shipholding Group, Inc. (NYSE:OSG) (the “Company” or “OSG”) announced today that it has been approved by the New York Stock Exchange (“NYSE”) to transfer

Offshore Energy

POSH Bags Shell FLNG Contract

Singapore’s offshore marine services provider PACC Offshore Services Holdings Ltd. (POSH) has been awarded a contract to support Shell’s Prelude floating liquefied

US Oil Drillers Cut Rigs after 3 Weeks of Additions

U.S. oil drillers cut rigs this week for a 20th week this year after three weeks of additions, according to a closely followed report on Friday, as crude prices

Ulstein Delivers for BS Offshore

The first of two service operation vessels (SOV) ordered in 2015 by Bernhard Schulte Offshore (BS Offshore) and its client Siemens from Ulstein Verft in is now completed,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Navigation Offshore Oil Port Authority Ship Electronics Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1362 sec (7 req/sec)