Tullow will increase Local Content, once drilling is successful
Tullow Oil’s Spokesman George Cazenove
Tullow Oil’s Spokesman George Cazenove

…says spokesman George Cazenove

UK-BASED oil company, Tullow Oil plc, has committed to tapping into Guyana’s Local Content once successful discoveries are made in the Orinduik and Kanuku Blocks, offshore Guyana.

Tullow Oil, parent company of Tullow Guyana B.V., will be drilling a total of three wells – Jethro and Joe in the Orinduik Block, starting June 2019; and the Carapa in the Kanuku Block later in the year. The first two wells will be drilled by Stena Forth, which is currently in Ghana.

Tullow Oil’s Spokesman, George Cazenove, during a recent interview with Guyana Chronicle, said Local Content is relatively limited during the exploration phase. However, the oil company, in keeping with its overarching Local Content Policy, will utilize the skills and services of Guyanese, once the exploration is successful.

“Local Content is much more about the development and the production phase. Tullow has a good record in local content; we are proud of what we have achieved in East and West Africa, in Ghana and also in Kenya and Uganda. If you look in our publications we do, it is something that we prioritise, it is something that our contract prioritises as well, so we are required to include as much Local Content into our work as much as we can,” Cazenove said.

While the definition for Local Content varies, for Tullow Oil, it means getting local suppliers into the supply chain as much as possible, the company’s spokesman posited. He said it is important that small and medium size enterprises benefit from being part of the global Oil and Gas industry.

Tullow Oil, in outlining its position on Local Content, acknowledged that suppliers are critical to the success of a business. “Tullow is committed to encouraging and supporting local suppliers, either by working with them directly or through our own suppliers. A diverse and dynamic local economy benefits local people, and through our supply chain we can help to build the right environment to attract investment and create jobs in host countries,” the UK-based oil company said.

For Tullow, having a local supplier base is a critical part of its business. “By developing these suppliers, it helps us to create value, manage cost and reduce risk, which in turn enables us to keep our projects running efficiently and profitably in the long term,” it added.

Here in Guyana, the Department of Energy, Ministry of the Presidency, is still finalizing the country’s Local Content Policy. The policy document, when adopted by the National Assembly, would outline the framework on which Local Content will be understood, developed, measured and secured. In the context of Guyana, it is the sum of inputs of local goods and services including employment across the oil and gas value chain. It is intended to ensure the education, inclusion, and advancement of as many as possible in the value chain of the oil and gas industry.

In the interim, the Department of Energy has been encouraging joint ventures to better allow Guyanese to participate in the sector and raise their own standards. Currently, there are a number of joint ventures in place. These joint ventures include partnership in shore bases, aviation, oil spill management and supplies among others.

Meanwhile, Cazenove noted that Tullow Oil is impressed by the discoveries made by U.S oil giant ExxonMobil and its partners. With 13 wells successfully drilled to date, ExxonMobil puts its gross recoverable resource estimate to more than 5.5 billion barrels of oil equivalent in the Stabroek Block. He was, however, keen on stating that there are absolutely no guarantees in the exploration phase, and as such Tullow Oil, though cognizant of Guyana’s potential, remains open-minded about the end result.
Tullow Oil’s drilling exercise is being conducted after 3D seismic operations in the Orinduik Block were completed in September 2017.

Meanwhile, according to the Petroleum Contract, which was signed on January 14, 2016, once the recoverable costs have been satisfied, the profit will be shared between the government and Tullow for each field, based on an established system. This could see Guyana receiving a profit share as high as 60 per cent and as low as 50 per cent. For the first 25,000 barrels of oil, Guyana is in line to receive a profit of 50 per cent. For the next 25,000 barrels, the country’s profit would increase to 52.5 per cent and 55 per cent for the next 15,000 barrels. For the subsequent batch of 15,000 barrels of oil, Guyana would benefit from a 57.5 per cent profit and 60 per cent profit for more than 80, 000 barrels of oil. The profit will be shared between the government and contractor on a monthly basis. There is also provision for the country to recieve a one per cent royalty.

The agreement also provides for associated gas produced from an oil field within the contract area to be used for the purposes of the operations of production and production enhancement of oil fields, such as gas injection, gas lifting and power generation.
Tullow Oil is a leading independent oil and gas exploration and production company, which has interests in 90 exploration and production licences across 16 countries that are in West Africa, East Africa and ‘New Ventures’, which includes Guyana and French Guiana.

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