Tullow Hesitates over Namibia Block
UK independent Tullow Oil has been granted one more week to decide whether or not it will pull out of the Namibian offshore PEL 0037 exploration licence, according to fellow licensee Pancontinental. Like many other upstream firms, Tullow has been looking to reduce expenditure worldwide.
In a statement on April 1, the Australian explorer said that it agreed with Tullow in June 2015 to extend the date by when Tullow could come to its decision until March 31. "Tullow has now requested a further extension by when Tullow can elect to withdraw or continue in the licence. Pancontinental has agreed to extend the decision date to April 7 2016," said the latter's company secretary Vesna Petrovic. Tullow declined to comment about the Pancontinental announcement.
"Offshore Namibia has the potential to hold very large oil and gas reserves and it is significantly under-explored" says Pancontinental on its website, claiming that PEL 0037 has "prospective resources of 8.7bn bbls". It has a 30% interest in the licence, while 5% is held by Paragon Holdings based in the Namibian capital Windhoek.
PEL 0037 comprises three blocks covering a total of 17,295km2. It is north of the Wingat-1 oil discovery made in 2013 by Brazilian operator HRT in adjacent licence PEL 23; the find however was later declared uncommercial. Moreover Repsol bowed out as operator of nearby licence 0010 in 2015.
Tullow also has a non-operated interest in PEL 0030 licence, adjacent to the north of PEL 0037.
In 2014 Tullow was also operator with a 31% stake alongside Namibian state-owned Namcor (54%) and Japan's Itochu (15%) of the Kudu offshore gas discovery (production licence 003) near the maritime border with South Africa. However in November 2014, Tullow said it would "not be investing capital in the development as other projects currently rank higher in the capital allocation process" although it said it would assist the government if it wished to progress the field. A spokesman for Tullow told NGA this April 1 that it relinquished its Kudu interest early in 2015 in favour of Namcor, which became operator. In August 2015 however, when Itochu also said it would exit Kudu, Tullow was reported to be still transferring operatorship to Namcor.
Namcor's website says that, to date, eight wells have been drilled on the Kudu field and that it has 1.45 trillion ft3 (41.1bn m3) of proven reserves. The field, which was discovered in 1974 by Chevron, has in the past decade been considered for a potential 'gas-by-wire' venture serving Namibia and South Africa (by Tullow, alongside Russia's Gazprom which was a co-licensee in 2009-11). Last November Reuters reported that Namcor said that a final investment decision might be taken in mid-2016 on Kudu, based on a floating production system. However the project still looks uncertain.
Mark Smedley