Tullow boss expresses reservation over govt's decision to stop taking gas from Jubilee Field

The Executive Vice-President of Tullow Oil plc and Managing Director of Tullow Ghana, Mr Kweku Awotwi, has expressed reservation with the government’s decision to stop taking associated gas from the Jubilee field – a situation he says has forced the operators to be reinjecting the gas into the wells of the country’s first oil field.

This follows the relocation of the Karpower barge from Tema to its original location – Sekondi Naval Base, Western Region and the subsequent conversion of 90% of its engines from being dependent on HFO to natural gas.

According to the Ministry of Energy, this will save Ghana a monthly take-or-pay cost of US$40 million and projected annual savings of US$480 million. It added that the switch to natural gas would save electricity users an amount of US$170.5 million per year, and a projected amount of US$1.2 billion over the remaining term of the contract, by way of reduced electricity charges to consumers.

However, the Jubilee partners are unhappy the Ghana Gas Processing Plant is rather taking gas from Eni owing to the take-or-pay contract.

Speaking at a press interaction on Friday, 13 December 2019, Mr Awotwi explained that not only is the current arrangement expensive for the country, but threatens oil production at the Jubilee field.

“It is an odd situation the country finds itself because that take-or-pay is quite expensive – and our gas, which is associated gas – is actually free for the government, as against US$7.89/MMBtu cost of gas from Eni,” he said.

“This is why we are being forced to reinject that gas. The Ghana Gas Processing Plant has a capacity of about 150 MMScfd in terms of processing per day. We can produce over 200 MMScfd of gas and Eni can produce over 180 MMScfd; already, you can see where the constraint is coming from. Today, Ghana Gas is taking 80 MMScfd of our gas and 80 MMScfd of Eni gas; it does mean that all the other gas we produce, is reinjected.”

“This is not just harming our reservoir; it is also limiting our production. We are hoping that next year, Ghana Gas will take more of our gas so that we reinject less and protect the reservoir,” Mr Awotwi stated.