After years delay Tullow wants Kudu money back
After years of uncertainty and delays, the London-based Tullow Oil plc (Tullow) and its partners, Itochu Corporation (Itochu) from Japan and the National Petroleum Corporation of Namibia (Namcor), are decided to move the Kudu Gas-To-Power project ahead in Namibia.
Actually the working interests of the Kudu gas field are shared between:
– Tullow 31% is the operator
– Itochu 15%
– Namcor 54%
This turnover among the share holders resulted mostly from the uncertainties about Kudu oil and liquids reserves compared with natural gas.
After years of exploration and tests Kudu appeared to be mostly a natural gas field with 1.38 trillion cubic feet (tcf) of proven reserves, 3.82 tcf of probable reserves and 9.98 tcf of possible reserves.
Tullow to develop Kudu in two phases
– Phase 1 as a Gas-To-Power project
– Phase 2 as a natural gas export project
– Extract and process the natural gas with an offshore platform
– Export the gas through a 170 kilometers pipeline up to a power plant located at Oranjemund in Namibia, along the border with South Africa.
– Convert the natural gas into 800MW of electrical power.
Kudu phase 2 has been explored through multiple scenarios including:
– Export pipeline to South Africa
– Liquefied natural gas (LNG) Conventional
– Niche LNG
– Compressed natural gas (CNG)
The decision regarding the most relevant scenario on Kudu phase 2 will depend on the revised estimation of the recoverable reserves beyond the Kudu phase 1.
Interestingly the market price of the natural gas will affect the profitability of the phase 1 and 2 in opposite way.
In producing 800MW, the Kudu phase 1 will cover far more than Namibia domestic consumption, so that 40% could be exported to the neighboring South Africa.
So regardless of the gas prices, Kudu is to power Namibia and provide it an additional source of revenues.
For the Kudu phase 1 project, the offshore platform would have production capacity of 130 million cubic feet per day (cf/d) in order to provide the corresponding feestock to generate 800MW at the power plant.
In respect with the amount of money invested by Tullow along the last seven years and the estimated $1 billion capital expenditure for the Kudu phase 1, Tullow is now willing to get his money back in making the final investment decision (FID) in 2013 for a first production to start in 2017.