Tullow Oil Ghana is set to reduce its workforce by at least 25 percent due to Tullow Oil Plc’s massive disappointments in operations Africa and South America.
The planned restructuring process, Bloomberg notes, is likely to lead to nearly 40 percent loss of the workforce in its Kenya operations as well as the shut of offices in Dublin, Ireland and Cape Town, South Africa.
Ghana, being one of the key markets for the Anglo-Irish oil company, is going to be hit hard by the restructuring process.
A statement issued by the company said: “Tullow confirms that is has begun a restructuring of its global business. The restructuring follows Tullow’s announcement in December that its oil production and associated revenues in 2020 and beyond will be lower than forecast.”
“Tullow estimates that the measure will deliver considerable savings and the Group’s workforce will reduce by approximately a third globally with potential office closures in Cape Town and Dublin among a number of measures to reduce costs and overheads.”
Sources close to the company told Citi Business News that the ongoing global redundancy process will lead to the departure of 35 percent of Tullow Ghana’s senior leadership as well as overall 25 percent job losses for staff made up of both Ghanaians and expatriates.
The redundancy programme will be done in three batches with the first group of workers set to exit the company by March, the second batch to depart by June, and the last in December 2020.
Tullow Ghana has faced production challenges in its Jubilee fields where it has been forced to reinject gas because there is no immediate means of offloading gas to buyers. The gas reinjection has reportedly led to nearly 30 percent cut in oil production in Jubilee.
Also, the Tweneboah Enyerra Ntomme (TEN) oil fields has also faced its own challenges as one of the oil production wells suddenly had to be suspended due to what is described as a sudden increased ‘water cut’ — a situation described as the ratio of water to oil in a production well. More water means less oil and loss of revenue.
The challenges has led to a drop in the company’s revenues and free cash flow by 30 percent.
The restructuring will allow Tullow to match its cost base to its expenditures as well as a lower production forecast of 75,000 bopd in 2021 and beyond.
Tullow’s challenges bite Ghana
Ghana’s petroleum revenues for 2019 fell by more than four percent according to provisional data released by the Bank of Ghana.
The central bank’s data released earlier this week shows that the country recorded US$503.1 million from crude oil liftings, surface rentals and corporate taxes in the second half of 2019.
The first half of the year also generated US$434 million bringing the total petroleum revenue received for last year to US$937.7 million.
Last year’s revenue is four percent lower than the US$977.1 million the country received from its petroleum resources.
The drop in petroleum revenues comes at a time the lead partners of Jubilee Fields, Tullow Oil, had to undergo a restructuring process amidst production challenges at Jubilee Fields and one of the wells at the Tweneboah-Enyerra-Ntomme (TEN) Fields.
The challenges at Jubilee relate to re-injection of gas into the wells which the company stated had led to a 30 percent cut in production.
At the TEN fields, a production well at Enyerra had to be suspended leading to a cut in production figures at TEN.
Source: Citinewsroom.com
