Tullow Oil to shoulder Kosmos' $65 mln burden over Ghana rig dispute
LONDON - Britain’s Tullow Oil has to cover nearly $65 million of costs linked to a cancelled rig contract in Ghana after losing a dispute with partner Kosmos Energy, the companies said on Wednesday.
The costs relate to a rig contract with Seadrill that Tullow cancelled in December 2016 after Ghana set a drilling moratorium on its TEN offshore oil and gas field, which is located in waters then claimed by both Ghana and Ivory Coast.
Tullow is lead operator of the project, in which Kosmos Energy, Anadarko Petroleum Corporation, Ghana National Petroleum Corporation and PetroSA also hold stakes.
A London judge ordered Tullow this month to pay Seadrill around $254 million, saying Tullow was wrong to end a contract between the companies on the grounds of force majeure over a maritime border dispute in West Africa. The company had originally said its partners would pay in keeping with their stakes in the project, but Kosmos challenged this.
A panel of arbitrators at the International Chamber of Commerce ruled in favour of Kosmos, which means Tullow will not be able to claim back Kosmos’ $50.8 million share of the Seadrill cost and will have to reimburse Kosmos around $14 million in legal and rig demobilisation costs.
A Tullow spokesman said Anadarko has answered Tullow’s cash call over the Seadrill ruling. Anadarko had no immediate comment.
A Tullow spokesman on Wednesday said the company had decided not to appeal the original court ruling.
With Tullow’s 47 percent stake in TEN and its duty to pay costs for Ghana National Petroleum Corporation’s (GNPC) stake, the British company had expected to pay around $140 million net.
“The challenge for Tullow is to demonstrate that the events of 2015-16 are behind it, and in H2/18 it is pushing ahead with a strategy that involves doing more with less and unlocking the upside potential in East Africa,” RBC said in a note.
Tullow is working towards final investment decisions for its Kenya and Uganda projects. (Reporting by Shadia Nasralla, editing by Louise Heavens and Jan Harvey)