Tullow Oil

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TULLOWOILUGANDA

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Unprecedented achievementsAlan Swaby looks at a FTSE 100 oil company that didn’t have a barrel of oil to its name 25 years ago—but now has billions

Unprecedented achievementsAlan Swaby looks at a FTSE 100 oil company that didn’t have a barrel of oil to its name 25 years ago—but now has billions

Tullow Oil Uganda

ullow Oil is sitting on vast reserves of oil, so much so that the share price has gone from 400p in 2006 to 1400p today. Its biggest find to date—the Jubilee offshore field in Ghana—came on stream in 2010, just three years after the discovery was made. Other global sites saw an average of 58,100 boepd in 2010 from fields as far apart as the North Sea and Pakistan.

Tullow Oil Uganda

T

Tullow Oil Uganda

Globe Trotters Ltd (GTL) is 100 per cent owned by

Ugandans and run by a team of youthful experts,

dynamic and professional staff, primarily handling

movement of cargo in the East African region. GTL

has been given an opportunity to offer transport

services to Tullow’s Uganda operations, which is

largely as a result of the management of Tullow

putting an emphasis on enhancing locally-owned

Ugandan companies’ opportunities to grow with the

newly found oil in Uganda. We hope Dr Brain Glover

attains Tullow’s expectations and continue the

willingness to support Ugandan owned companies

and communities.

For God and my country—Harold Ssemalwadde,

Managing Director.

Globe Trotters Ltd

But it was a different story 25 years ago: the company didn’t have a single barrel of oil to its name. Nor, for that matter, did the experts ever think it would, looking as Tullow was in the abandoned fields of Senegal. But Irishman Aiden Heavey, who founded the business, has proved them all wrong and a created a lasting bond with Africa in the process.

“There’s no doubt that Aiden is an inspirational leader,” says general manager of Tullow Oil Uganda, Dr Brian Glover. “There was a time when Tullow found it difficult to attract good people; now, we have become something akin to a popular club that the best in the business want to join.”

Glover puts this attractiveness down to the Tullow way of working. “We support and encourage entrepreneurial spirit,” he says, “but always by working within strict ethical guidelines.”

Social responsibility isn’t something universally linked with the oil exploration business—especially when working with autocratic governments in developing countries. But it’s the way Glover says that Tullow works, and he has just spent the last year doing exactly that

Tullow Oil Uganda

with the company’s latest find and possibly greatest challenge to date.

“The industry was astounded that we were able to bring the deepwater Jubilee field in Ghana on stream in just three years: an unprecedented achievement. Now we have to do something even more challenging—develop the Lake Albert deposits without damaging some of the world’s most ecologically sensitive lands.”

In case your African geography is rusty, Lake Albert is a 160 kilometre long inland sea separating the Democratic Republic of Congo from Uganda. It’s been known that there was oil in the region for years, thanks to the telltale seepage of oil. But just how much was never clear.

In 2004, Tullow acquired an interest by buying

Pearl Engineering Company Limited was established

in 1994 in Uganda and renders services in the civil

and building, mechanical and electrical engineering

fields. It also provides technical service audits and

procurement of project materials. Over the last 18

years we have provided construction services to

many clients including Tullow Uganda Operations

Pty Ltd. The work with Tullow includes construction

of access roads, oil drilling pads and other civil

engineering associated works. We wish to join

hands with foreign companies in joint venture

arrangements to increase our participation in the oil

sector. Contact us at [email protected]

Pearl Engineering Company Limited

Energy Africa. It then went into high gear drilling 40 exploratory wells, with all but one encountering hydrocarbons. To date, reserves of one billion barrels have been identified and it is believed that a further 1.5 billion barrels of prospective resources remain.

Over the intervening years Tullow has acquired additional equity in that locality by purchasing Hardman Resources in 2007 and Heritage Oil and Gas in 2010, leaving it as the sole rights holder in a 160 kilometre by 60 kilometre area that has made 17 workable discoveries.

Developing the Lake Albert reserves, though, will

Tullow Oil Uganda

Engen is a multinational petroleum company with

a 125,000 barrels-per-day refinery. It is a key

supplier of fuels and lubes for mines and is the

second largest oil marketing company by volume in

Sub-Saharan Africa. Engen’s downstream activities

in Uganda involve marketing of fuels, lubricants

and other petroleum products. Engen has supplied

Tullow Oil with fuels and lubricants for its exploration

activities since 2007.

Engen

be no easy task. Uganda is a landlocked country roughly the size of England but over 1,000 kilometres from the sea; and outside a handful of urban centres, it has precious little infrastructure of any kind, with no road or rail network to speak of (certainly nothing robust enough to transport the thousands of tons of equipment needed to extract oil).

“We estimate that the project will cost US$10 billion,” says Glover, “and clearly, it is far too big for us to want to tackle it all alone.” Consequently, Tullow has decided to invite two heavyweight partners to help develop Lake Albert. Agreement has been reached with Total and CNOOC, China’s largest producer of offshore oil and

Tullow Oil Uganda

gas. For a cash consideration of US$2.9 billion, the two partners will each receive one third of the project, with Tullow retaining the final third.

The precise details of how best the three partners will work together are currently being worked out but one thing is known for certain. Until now, Uganda has had to import every drop of oil it needed, so a priority component of the plan will be to build a small scale refinery—at least big enough to satisfy the country’s energy needs. Whereas once it was thought that only a small quantity of oil was involved, it is now known that there are much larger reserves, opening up another development option of having a pipeline to the Indian Ocean.

In the meantime, Tullow is taking its social responsibilities very seriously. “It is important to us,” says Glover, “that all Ugandans benefit from the finds that have been made. As well as providing direct employment opportunities, we are trying to encourage local entrepreneurs to become suppliers to the project. By creating a multiplier effect, oil revenue can develop skills and a more profound economic base for the country.”

Tullow already employs 85 per cent local

Threeways Shipping Services is a Uganda founded

company operating in the Great Lakes region which

covers Eastern Africa, DRC and Sudan.

The past 15 years have seen us evolve from

customs brokers to fully fledged freight forwarders,

of both general and project cargo. Threeways today

dominates the provision of various oil and gas

logistical support to Tullow both in- and into field

with professional, safe and high quality standards.

Our relationship with Tullow has seen us develop

core competences in QHSE and now operating our

own fleet of 180+ trucks, cranes and specialized

heavy lift equipment with Tullow and other

projects regionally.

Threeways Shipping Services

workers; but filling the vast numbers that will eventually be needed isn’t going to be easy. The local population comprises fishermen who live much the same simple lifestyle as they have for centuries. The only difference is that overfishing has made a huge dent in fish stocks that is going to take some time to recover. But before fishermen can become roughnecks, they need a certain level of training, which Tullow is committed to providing.

In a similar scenario, outside the

The industry was astounded that we were able to bring the deepwater Jubilee field in Ghana on stream in just three years: an unprecedented achievement

Tullow Oil Uganda

Murchison Falls National Park, parts of what ought to be equatorial forest are looking decidedly threadbare. “With no electricity or gas on hand,” says Glover, “wood accounts for the energy needs of 93 per cent of the population. We are working with local groups to replant trees—not just for bio-fuel, but as commercial crops.”

Health also has its challenges—particularly from cholera, a water-bo rne disease that calls for better provision of drinking water. The one bright spot is the low incidence of HIV/Aids, thanks to the government recognising very early the potential damage of ignoring the problem.

With a wish list as long as Tullow’s, everyone from the government to the local population

will be looking forward to the day when revenue starts flowing from the expected 200,000 barrels of oil per day the basin will produce. www.tullowoil.com BE

KAGGA has 37 years’ experience in the provision

of consultancy services in engineering and

management in sectors including transportation,

water, sanitation, hydropower, structures, solid

waste, and urban & rural development. KAGGA

has offices in Uganda, South Africa and South

Sudan and has operated in more than 10 African

countries. Currently, KAGGA is providing Tullow Oil

with engineering consultancy services.

Kagga and Partners (KAGGA)

TULLOWOILUGANDA

www.tullowoil.com