Tullow Oil’s shares rose to a five-month high on Monday this week after the Hamburg-based International Tribunal for the Law of the Sea (ITLOS) ruled in Ghana’s favour in a maritime dispute with Ivory Coast.
The Tribunal allowed Tullow Oil to proceed with its work in the Tweneboa, Enyenra and Ntomme (TEN) oil fields off the coast of Ghana, but ordered that no new drilling should occur in the contested area until the dispute is resolved.
The ruling has major implications for Tullow Oil and its partners in the TEN project because it can potentially alter the current fiscal agreements with the Ghanaian government if Ivory Coast wins the case.
The Tribunal reasoned that suspending all ongoing oil activities by Ghana in the disputed area like Ivory Coast had pleaded would cause massive financial losses for Ghana and the oil companies engaged in the TEN project.
Tullow is the main operator in the project with 47% interest. Its partners are Kosmos Energy, Anadarko Petroleum, Petro SA and the Ghana National Petroleum Corporation.
According to Tullow, the project will proceed as planned despite the ruling because the the London-listed company had already drilled enough wells to commence production. Tullow is aiming for 80,000 barrels of oil per day from the project by the end of next year.
“Development work on the TEN project continues,” Tullow said in a statement on Monday. “The project remains within budget and on schedule with first oil expected in mid-2016.”
Following Ghana’s discovery of oil in 2007, Ivory Coast revived its claim over the waters largely due to vaguely demarcated Atlantic borderlines between the two West African neighbours. The 2010 discovery of oil in Ivory Coast’s Dzata-1 deep water well that is located close to the disputed area raised the stakes further, with Ghanaians claiming that Ivory Coast was attempting to “grab its oil.” Several negotiations between the two countries failed to yield results forcing Ivory Coast to take the case to the ITLOS.
Some analysts have however cautioned the government about the implications of the Tribunal’s ruling, arguing that the fact that Ivory Coast’s petition was partly successfully should be reason for worry for Ghana.
The tribunal is expected to give a final ruling on the case in 2017.
Report by Chris Musiime
