Tullow Oil to lose some US$500 million

Accra based Swiss-Ghanaian transactional advisory firm, Konfidants has projected that International Tribunal for the Law of the Seas’ (ITLOS) ruling on the maritime boundary case will cost Tullow Oil some US$500 million.

ITLOS ruled that Ghana may proceed with on-going oil exploration projects in the disputed area of the maritime boundary with the Ivory Coast in the Atlantic Ocean.

The Tribunal however directed Ghana to ensure that the country “takes all necessary steps to ensure that no new drilling either by Ghana or under its control takes place in the disputed area.” Konfidants however believes the ruling will not augur well for the British oil company despite its intentions to proceed with the TEN project.

“The analysis further shows that by restricting the base case scenario, the ITLOS Judges have thus cost the TEN partners at least $1 billion in losses, of which Tullow, as the lead operator, would be saddled with at least $500 million,” an analysis by Konfidants indicated.

According to the firm, “the halt to all extended reach drilling, and interference in the timeline of the Wawa field appraisal and development (including potential integration into TEN) were largely discounted.”

The ITLOS in its provisional measures granted to Cote D’lvoire also ruled among other things that Ghana shall carry out strict and continuous monitoring of all activities undertaken by Ghana or with its authorization in the disputed area with a view to ensuring the prevention of serious harm to the marine environment.

Regarding that particular ruling, Konfidants said: “the Judges themselves were of this opinion: ‘Côte d’Ivoire has not adduced sufficient evidence to support its allegations that the activities conducted by Ghana in the disputed area are such as to create an imminent risk of serious harm to the marine environment.’”

The firm said the measure can be described as “merely precautionary”, adding that is “unlikely that it will lead to any change in the status quo existing in the disputed area. They are measures (a) and (b) that have created all the confusion in the air, and for good reason.”

The ITLOS also requested that Ghana be prevented from circulating data in respect of exploitation and exploration in the area but Konfidants believes that “even if Ghana were ordered to stop gathering information from now on, the damage to Côte d’Ivoire would still increase day by day if Ghana continues to process the data that it has already acquired.”