Shell joining smaller UK producer in French Guiana

[Matthias Offodile]

Shell joining smaller UK producer in French Guiana

Bloomberg News
Nov. 11, 2009, 5:39AM


Royal Dutch Shell Plc agreed to join Tullow Oil Plc, the U.K. oil and gas explorer poised to start production in Ghana in late 2010, in exploring French Guiana.

Shell, Europe's largest oil company, will acquire a 33 percent interest in the Guyana Maritime licence in the South American nation, where Tullow has identified several potential “leads” similar to its Jubilee field in Ghana. It has an option to buy a further 12 percent later, London-based Tullow said today in a statement.

“This is the first step with Shell in French Guiana and it will show” whether further cooperation is possible between the two companies, Tullow's Chief Financial Officer Ian Springett said in a phone interview. Tullow expects to complete talks “very shortly” on adding one more partner to the project, he said, without giving any more details.

Tullow, Shell, Exxon Mobil Corp. and other explorers are looking to tap new reserves in South America and Africa as fields dry up elsewhere. Tullow is cooperating with Anadarko Petroleum Corp. in West African exploration projects including the development of Ghana's Jubilee field.

“This purchase adds quality acreage to our deep water portfolio in the Americas,” David Lawrence, an executive vice president at The Hague-based Shell, said in an e-mailed statement. “It allows us to apply technical and operating expertise built up over decades of pioneering work in the deep waters of the Gulf of Mexico and elsewhere.”

Tullow will retain a 64.5 percent operated interest in the French Guiana block where a 3,000 square kilometre seismic program commenced in mid-September, it said.

The sale “is subject to formal approval from the relevant French authorities,” Tullow said, without providing any financial details.

Separately, Tullow said “excellent progress is being made on the Jubilee field development project with six development wells drilled within prognosis over the period,” referring to the past four months.

The floating production and export terminal fabrication “in Singapore is on schedule and subsea equipment fabrication is on track.” The project is set to deliver its first oil in the fourth quarter of 2010.

Kosmos Energy LLC, Tullow's partner in the Jubilee field, said Oct. 12 it agreed to sell its Ghanaian assets, including a 23.49 percent stake in Jubilee, to Exxon. A day later, Ghana National Petroleum Corp., the state-owned energy company, said it was still in talks with Kosmos on acquiring the assets itself and would consider proposals from potential partners once the sale was complete.

Kosmos is continuing to fund the Jubilee development amid talks to sell its stake, Springett said.

“Everything is moving forward fine and Kosmos has access to funding” and “on the day-to-day basis we are moving forward with Kosmos,” he said. Would-be entrants to the project will be determined on the “basis they can fund the development.”

Also in Africa, Tullow said it's preparing to drill the onshore Likonde-1 exploration well in the Lindi block in Tanzania at the beginning of 2010. This will be Tullow's “first major well” in Tanzania, Springett said. Aminex Plc of the U.K. is a partner in the project, according to Tullow's Web site.

In Bangladesh, extraction from the Bangora field has increased to 120 million cubic feet a day after the Bangora-3 well works were completed. In September, Petrobangla, Bangladesh's state oil company, awarded Tullow offshore Block SS-08-05, the U.K. company said.

“Discussions with Petrobangla to finalise the production sharing contract for this licence are ongoing and it is expected that exploration work will commence in 2010,” Tullow said.

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