Shares in Tullow Oil (LON:TLW) gained 14 percent and closed at £14.18 on Monday after the FTSE 100 group announced it is going to join the race for oil riches in the Arctic.
Maersk and Tullow Partnership
On 15 October The Telegraph reported that Tullow Oil has taken a 40 percent equity position in Block 9 – a giant 11,802 sq km license in Baffin Bay, to the northwest of Greenland. Naalakkersuisut, Greenland’s government, has approved the agreement between Maersk Oil (CPH:MAERSK-A) and Tullow in which the Danish company will continue to act as operator of the license with its 47.5 percent interest, while Greenland’s Nunaoil will hold 12.5 percent.
Maersk Oil has already conducted a seismic survey of some 1,850 sq km and will decide on whether to drill in the area by 2014 after analysing the 3D seismic data. Both companies assured no drilling will take place until it has been established there is no risk to the fragile Arctic Environment. “We are very pleased to be partnering with Maersk Oil and Nunaoil in this unexplored and highly prospective province. Our complementary skills and expertise will allow us to evaluate fully the potential of it in the initial seismic phase,” said Tullow’s exploration director Angus McCoss.
British-Based Oil Company Develops African Licenses While Planning Arctic Venture Tullow shares the ambitions of oil giants such as Shell, ExxonMobil and Chevron to tap into the suspected 90 billion reserves of crude oil in the Arctic – almost three times the annual global consumption.
Mauritania Natural Gas Project
According to Tim O’Hanlon, vice president of Tullow’s African business, the UK-based explorer will start working on a natural gas project in Mauritania as soon as talks with potential buyers are finished. Construction of pipelines for the Banda gas field and other necessary facilities are scheduled to begin by the end of next year and gas production is planned for late 2014 or early 2015 said Mr O’Hanlon as reported by Bloomberg.
Banda reserves are estimated to be around 500 billion cubic feet and some of the natural gas production is meant for a future Mauritanian power-plant.
Tullow to Begin Third Well in Kenya
The British explorer and its Canadian partner Africa Oil Corp (CVE:AOI) have started drilling a third well in Kenya in an attempt to discover further reserves in the east African country. The well is known as Paipai-1 and has a planned total depth of 4,112 meters with predicted reserves of 121 million barrels of oil. The companies hope to find crude oil as opposed to more natural gas.
Paipai-1 is an onshore drilling site in Block 10A – Tullow acts as operator with 50 percent share followed by Africa Oil with 30 percent and London-listed Afren with the remaining 20 percent.
Tullow Oil is also awaiting results from another oil drill in Twiga-1, which are expected by the end of the month.
If there is an oil discovery, the companies will most probably spur heavy investment in Kenyan infrastructure projects such as refineries and pipelines.
Kenya’s energy minister Kiraitu Murungi believes his country has enough oil to accommodate the needs of the oil ventures. “We are becoming the new Middle East,” said Mr Murungi at a conference earlier this year.