Tullow Oil delays Uganda oilfield sanction to early 2017

Britain’s Tullow Oil plans to take a final investment decision (FID) on a new oilfield project in Uganda in early 2017, later than planned, Chief Executive Aidan Heavey has said.

Tullow discovered oil in the East African country in 2006 and had planned to make an FID on its oilfield by the end of 2016.

“You need a pipeline route firmed down and then you need to get FID. So FID probably in early 2017 and then three years later (2020), you would have first oil,” Mr Heavey said at the Africa Oil Week conference organised by Global Pacific & Partners.

He added Tullow expected to obtain a production licence this year in Uganda and to start oil output there in 2020.

The pipeline route to move oil from landlocked Uganda to the Indian Ocean has not yet been determined.

Uganda has been pushing for an earlier production date, citing work by other investors. But previous targets have slipped.

“If Tullow is talking of 2020, that’s their business,” said Ugandan Energy Ministry Spokesman Bukenya-Matovu Yusuf. “CNOOC, which has a production licence, has been doing a lot of work toward production and our 2018 target still stands.”

China’s CNOOC is also investing in Uganda, alongside France’s Total.

Crucial to any investment decision will be the decision on a route for an export pipeline out of the land-locked nation. A proposed northern Kenyan route has raised security concerns as it lies near war-torn Somalia. Total has said it is considering a pipeline through Tanzania.

Meanwhile, Tullow Oil expects its 10-field development in Ghana to start producing oil next year and deliver significant cash flow, the company’s vice president for Africa said yesterday.

Tim O’Hanlon, speaking at the Africa Oil Week conference organised by Global Pacific & Partners, also said the company was trimming capital spending in the face of depressed prices, to $1.2 to $1.4 billion next year from $1.9 billion in 2015.