Joint Venture Partners Extend Production Licenses in Ghana, Sign MOU for $2 Billion Investment

Thanks to a memorandum of understanding (MoU) with the government of Ghana, Tullow Oil, Kosmos Energy, PetroSA, Ghana National Petroleum Company (GNPC), and Explorco have signed on the dotted line to prolong the production lifespan of two fields off the coast of Ghana, with an extension of production licenses to 2040.

This MoU, which enables the extension to 2040 of the West Cape Three Points (WCTP) and Deep Water Tano (DWT) licenses that cover the Jubilee and TEN fields, entails approval to drill up to 20 additional wells in the first field, representing an investment of up to $2 billion in Ghana over the life of the licenses.

Significant Milestone

The first field started producing oil in 2010 through the floating production, storage, and offloading (FPSO) unit Kwame Nkrumah MV21, while the second one followed suit in 2016 through the permanently moored FPSO TEN. The operator, Tullow Ghana, a subsidiary of Tullow Oil, hired the Noble Venturer drillship for its campaign, which entails six firm wells.

John Abdulai Jinapor, Ghana’s Minister for Energy and Green Transition, commented: “This memorandum of understanding between the Republic of Ghana and the DWT and WCTP partners marks a significant step forward in our nation’s energy sector. Extending the licenses to 2040 demonstrates our commitment to fostering a stable and attractive investment climate.

“This MOU will not only ensure the continued production of oil, supporting our economic growth, but also allow us to further develop our infrastructure and create more job opportunities for our citizens. We are dedicated to responsible resource management and look forward to a prosperous future fuelled by sustainable energy practices.”

Future Prospects

The extension is anticipated to enable the joint venture (JV) partnership to realize a material increase in gross 2P reserves. In a bid to underpin the continued development of the fields, a commitment has been disclosed to work to increase the supply of gas from the Jubilee and TEN fields to approximately 130 mmscf/day.

There is also reduced gas price for Jubilee associated gas, a guaranteed reimbursement mechanism for gas sales, and investment in GNPC and the Petroleum Commission’s capacity, with a focus on the use of advanced technology.

Positive Outlook

Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow, highlighted: “This is a valuable step forward for the government of Ghana, Tullow and our JV partners, highlighting the collaborative and constructive relationship we all have in reaching our shared goal of building a better future for the people of Ghana, through responsible oil and gas development.

“This extension and the fiscal stability of our contracts emphasizes the opportunity Ghana represents to deliver additional value through production and reserves additions, providing greater long-term optionality and materiality to these core assets.”

Continued Partnership

The JV’s next steps will bring the handover of a Jubilee plan of development (PoD) addendum, entering into new fully termed gas sales agreements (GSA), and the submission for parliamentary approval of the payment security mechanism and license extensions. This is planned before the end of the third quarter of 2025.

Andrew G. Inglis, Chairman and Chief Executive Officer of Kosmos, emphasized: “This memorandum of understanding recognizes the importance of oil and gas in Ghana and the desire of the new administration to create an attractive environment for new investment in the sector.

“Extending the Ghana production licenses is highly accretive, adding material reserves and enabling the partnership to continue investing in the country for the long-term.”