Tullow Oil faces delays at Jubilee field in Ghana

LONDON -- Further to its release of Feb. 18, Tullow Oil issued the following operational update on Jubilee field in Ghana:

Technical investigation of the condition of the turret bearing on the FPSO Kwame Nkrumah has confirmed that the bearing has been damaged and is no longer able to rotate as originally designed. Oil production and gas export can continue, but under revised operating and off-take procedures. A root cause analysis is ongoing and a project team is assessing which long-term remediation option is most appropriate. Initial feasibility studies by the team have confirmed that the bearing issue can be fully resolved.

The FPSO Kwame Nkrumah has now been placed on "heading control" through the use of tugs, which minimize vessel movement around the bearing. New operating procedures, including the use of a dynamically-positioned shuttle tanker (capacity of 250,000 bbl of oil) and a storage tanker (capacity of 1 MMbbl of oil), are being implemented to assure safe production and off-take operations.

Although all necessary equipment for the new operating procedures, including the two tankers, are in place, it is important that additional time and due care is taken to implement new procedures and receive required approvals. Safety and protecting the environment remain Tullow’s key priorities. Tullow currently estimates that production from the FPSO will re-start in approximately two weeks time and will also take time to ramp-up. Tullow’s production guidance will be re-issued once the new operating arrangements have stabilized.

Tullow has a comprehensive package of insurances in place, including hull and machinery insurance, procured on behalf of the Joint Venture, which covers relevant operating and capital costs associated with damage to the FPSO, and business interruption insurance, which covers consequent loss of production and revenue. Claims under both policies have been notified to our insurers.