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Opinions of Thursday, 17 March 2016

Columnist: Mabel Aku Baneseh

FPSO Prof. Mills: What prospects for Ghana?

The world was taken by shock when prices of crude oil nose-dived to set a 12-year record. Many had anticipated the prices would get back to “normal”, but the slump continued its downturn from $115 in the second half of 2014 to as low as $20 in early 2016.

Many oil producing countries, industry players and investors have reeled under the slump with job cuts, abandonment of drilled wells and production equipment, loss in investments and drop in new investment following in tow. One of the companies heavily hit by the price slump is BP. It has announced 4,000 job cuts.

The job losses will take down staff numbers in BP’s upstream oil and gas exploration division from 24,000 to below 20,000 by the end of 2017, although it is understood most of the jobs will go this year, say financial analysts. According to Bank of America, bankruptcies recorded in the sector in the second half of 2015 exceeded the levels witnessed during the financial crisis in 2008.

Tullow Oil Plc’s Challenges

One of Ghana’s oil giants, Tullow Ghana Limited, an independent oil and gas exploration and production group, has not been spared the ongoing global crude oil crisis. It recorded a 27 per cent loss in revenue last year. This, however, did not deter it from continuing with its projects across the world. The company’s 2015 Full Year Results for the year ended December 2015 indicated that the oil company had used smart methods to be in business – without having to cut jobs. For instance, the Jubilee oilfields, the symbol of Ghana’s first commercial oil, exceeded its production target in 2015. The Managing Director of Tullow Ghana Limited, Mr Charles Darku, told the Daily Graphic that the Jubilee field exceeded its gross production target during 2015 averaging 102,600 barrels per day. He forecasted the Jubilee 2016 average production to be around 101,000 barrels of oil per day.

Arrival of FPSO Mills

Another project making progress is the $5 billion Tweneboa, Enyenra and Ntomme (TEN) project – which is situated in the Deepwater Tano block, around 60 kilometres offshore of Western Region. This project is advancing excellently with all the key milestones having been met.

On March 2, 2016, Floating Production Storage and Offloading (FPSO) vessel, christened FPSO Professor John Evans Atta Mills, arrived on the shores of Ghana. The vessel’s arrival is a clear manifestation of Tullow Ghana’s competence and commitment towards meeting its production targets on the TEN project. The vessel is named in memory of the late President Atta Mills, who oversaw first oil from Ghana’s Jubilee Field in 2010. The vessel, which was named by the First Lady, Mrs Lordina Mahama, at a colourful ceremony in Singapore in September 2015, will be fixed to the seabed using pre-installed anchor chains and piles.

This will be followed by the hook-up of subsea facilities to the FPSO via flow line risers and control umbilicals, much of which have also been pre-installed. The 11 pre-drilled wells are now being completed with the sixth completion under way. The integrated facilities will undergo final commissioning and testing during the second quarter and following start-up, a gradual ramp up in production towards plateau is anticipated during the second half of 2016. First oil from the TEN project is expected in mid-2016.

Boost in Local Content

Ghana’s local industry has benefitted and continues to benefit from the ongoing TEN project. A local company by name Group Five Construction Ghana Ltd built the steel cylinders which have since been installed on the seabed. Other Ghanaian contributions to the FPSO include the vessel’s module support stools, which sit on the deck and support heavy equipment. Two Ghanaian companies Seaweld Engineering Ltd and Orsam Ltd, fabricated the stools.

Besides the opportunities given local companies under the local content policy, 15 Ghanaian technicians who will help operate FPSO Mills have been trained and graduated from the TTE Technical Training College in the UK with internationally recognised vocational qualifications. The 15 technicians are employees of MODEC Ghana Ltd., a group company of MODEC, which will operate and maintain the vessel when it is anchored offshore Ghana.

Mr Darku has stressed Tullow Ghana Limited’s commitment to ensuring that locals gain maximum benefit from the company’s projects in Ghana. He said: “It’s great to see these Ghanaian technicians graduating with internationally recognised qualifications. The TEN Project Partners are committed to maximising Ghanaian participation in the project and it is rewarding to see this coming to fruition.

“The TEN project has already surpassed the amount of local participation in Ghana’s last big development project, the Jubilee Development, and in conjunction with the Petroleum Commission and our partner GNPC, we continue to grow the pool of oil industry skills and expertise in Ghana. These 15 technicians will have a vital role to play in keeping the oil flowing for Ghana.”

The Minister of Petroleum, Mr Emmanuel Armah-Kofi Buah, has the following contribution: “As part of government’s effort, to ensure that the oil and gas sector contributes towards the transformational agenda being pursued by His Excellency the President, John Dramani Mahama, major oil and gas projects are still being pursued in Ghana, despite the downturn of oil price worldwide.

“The arrival of FPSO Atta Mills moves us to a sustained production of oil and gas.”

Trailblazer

The crude oil market has suffered major losses in the past year but Tullow Ghana Limited’s resilience and prudent financial management have resulted in all of its projects progressing according to schedule.

The local industry has benefitted and continues to benefit immensely from the activities of Tullow Ghana Limited and its partners. Crude oil has seen a study rise in the past weeks but it is not clear if the prices will move to a level that will be beneficial to the producer and the consumer.

What is clear is, Tullow’s leadership role in protecting the interest of its workers while strengthening its investments. In a country where unemployment is high, Tullow Ghana Limited’s management policies can only be commended. It is, therefore, hoped the arrival of FPSO Mills in Ghana’s waters will cushion the economy further.