Jubilee Fields operator, Tullow Oil, and its partner, Kosmos, have revised down the cost estimate for integrating the field with nearby discoveries into the Greater Jubilee to $1.9 billion.
The revision was captured in a new Plan of Development that the two companies hope the government will approve before the year ends.
The amount is needed to integrate the Teak, Hyedua and Mahogany discoveries into the Jubilee Fields production and floating vessel to help extend the field’s lifespan and increase its commercial reserves.
Tullow Ghana’s Director of Exploration and Development, Nana Appia Kyei, told the Graphic Business on August 18 that the revised Plan of Development was resubmitted last month after an earlier one, which pegged the cost of unitization at $2.3 billion, was rejected by the government for being “too expensive”.
The gas price quoted in that December 2015 PoD was also thought to be “unfavourable” to the national gas aggregator, the Ghana National Petroleum Corporation (GNPC), Nana Kyei added.
“The government said we are not happy with the gas price, we are not happy with the cost of the development itself and then the rig you are going to use to develop is too expensive,” he said.
As a result, the government requested the two companies to withdraw the PoD and take a second look at the costs, which, although investments, will be recouped as capital gains once full development is completed and commercial production commences.
A former Head of the Petroleum Unit at the Ghana Revenue Authority (GRA), Mr Dela Klorbi, said the push for cost reduction was necessary, to ensure that the country maximises earnings from the field when production starts.
