The government’s projection of oil receipts from the Jubilee Fields is likely to be missed this year.
This is because the first quarter of the year is already gone and Tullow Oil, as a result of some challenges, is still producing oil at 70,000 barrels per day as against a projected target of 90,000 on which revenue projection has been based.
As per the 2012 Budget Statement and Government’s Economic Policy, “The total oil receipts for the 2012 fiscal year is projected at GhC1,239.82 million based on an estimated average oil price of US$90.00 per barrel and a daily production of 90,000 barrels per day.”
The amount, according to the budget, will comprise royalty payments of GhC236.86 million, income from governments carried and participating interest of GhC618.84 million and corporate income tax of GhC34.11 million.
But at an investor forum in Accra ahead of the Annual General Meeting (AGM) in London later in the month, the Founder and Chief Executive Officer of Tullow Oil Plc, Mr Aiden Heavey, told the media exclusively that the production from the Jubilee fields were still at 70,000 presently.
“We are making frantic efforts to bring production up to the 90,000 barrels per day and we hope to achieve that in due course,” he added.
Explaining the reason for the company’s inability to meet the production target of 90,000 barrels per day as projected by the government, Mr Heavey said the company, upon a comprehensive assessment of the situation, noticed that there were what he described as “fine grains” coming through the paths to the wells.
“We are working hard at it in order to find a long term solution to the challenge” he gave an assurance and called for patience as continuous work was being done to rectify the problem permanently.
He said the company had also fortunately identified a cheaper way of resolving other challenges and has intended to inject about US$400 million to bring production to its fullest capacity of 120,000 barrels per day to meet the capacity of the Floating Production, Storage and Offloading (FPSO).
The irony stills remains that should the prices of oil on the international market rise above the present average price per barrel of US$116, Ghana will not benefit because of the hedge price of the oil produced from the Jubilee Fields.
Phase 1A development of the Jubilee Filed was sanctioned in January 2012 and drilling of the first oil production commenced on schedule in February 2012.
This development, according to the 2011 Annual report of Tullow Oil Plc, will be conducted over an 18 month period and the total cost is expected to be approximately US$1.1 billion.
“In 2012, the Group expects to deliver total net production 78,000 to 86,000 bodp,” the report said.
Meanwhile, there are plans to acquire a second FPSO vessel to take off additional oil production from a project the company has christened Project 10.
During 2011, good progress was also made in appraising the 10 discoveries in Ghana. In February 2012, this was supported by the flow of testing the Owo-1 well which produced at a combined rate of approximately 20,000 bodp giving confidence in the ultimate commerciality of the field.
The engineering design of this development, which will consist of an FPSO and major subsea infrastructure, is progressing and PoD is expected to be submitted in the third quarter of this year with the first oil forecast 30 months after approval.
According to Mr Heavey, should the proposal be approved by the government, the new FPSO, with a capacity to hold up to 100,000 barrels of oil will, have to be purchased.
The founder of Tullow was of the view that prospects in the country was good and promising and urged calm for the company to do what was required of it to bring the best out Ghana’s oil fields.
He said the business of oil exploration and production was an expensive and risky venture which needed to be carried out with a lot of caution and tact and noted that Tullow, with its track record, was poised to deliver to meet shareholders expectation and to ensure
the continuous growth and sustainability of the company.