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Tullow Oil to boost oil production in Ghana and Uganda
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- Ghana produces about 100,000 barrels of oil per day and expects to increase production to 180,000 bpd in 2018.
- Tullow expects to start production in Uganda by 2020.
Tullow Oil, the UK-based Africa-focused oil explorer and producer, has concluded plans to boost its oil and gas production in Ghana and begin production in Uganda.
In Ghana, Tullow Oil expects its Ten Field development to start producing next year and deliver significant cash flow, Tim O’Hanlon, the company’s vice president for Africa, told Reuters.
A consortium led by Tullow Oil struck oil in Ghana in 2007 and began commercial production in 2011. Today, Ghana produces about 100,000 barrels of oil per day and expects to increase production to 180,000 barrels per day in 2018.
In Uganda, Tullow Oil expects to take a much-delayed final investment decision (FID) on a new oilfield by early 2017.
Tullow discovered oil in the Uganda in 2006. The bulk of Uganda’s export revenues has been from coffee, with agriculture comprising 21.9% of its GDP in 2014. The FID on its oilfield was expected to be made by the end of 2016 but plans on creating a pipeline route to transport oil from the landlocked country to the Indian Ocean have not been hashed out.
"You need a pipeline route firmed down and then you need to get FID,” Tullow’s chief executive, Aidan Heavey, told Reuters. “So FID probably in early 2017 and then three years later, you would have first oil."
Heavey said Tullow expects to start production in Uganda by 2020 after obtaining a production license.
Tullow Oil has been hit hard by the fall in oil prices. Unlike major oil companies that could rely on their refining and marketing businesses in periods of oil price slump, explorers and producers such as Tullow Oil have little wiggle room.
In February, Tullow Oil trimmed its exploration budget to $200 million from around $1 billion, previously. The company has also trimmed its overall capital spending to between $1.2 billion and $1.4 billion next year from $1.9 billion in 2015.
Tullow Oil reported a full-year net loss of $1.5 billion in 2014, compared with a net profit of $169 million in 2013. The company said it was hurt by weak oil prices and gas asset sales in Europe and Asia. Its revenue declined 16 percent year-on-year during the year ending in December 2014.
Chibuike Oguh is Financial Nigeria's Analyst of the Frontier Markets
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