Tullow awaits judgement in Seadrill rig termination case

Oil company Tullow Oil and offshore driller Seadrill are expecting a judgement shortly in an early rig contract termination case in Ghana disputed by the rig owner. 

To remind, Tullow in October 2016 sent a notice of force majeure to Seadrill for the West Leo rig contract, claiming that the field the rig had been hired for was subject to a drilling moratorium by the government of Ghana.

The moratorium was in place due to the, at the time, ongoing arbitration proceedings before the International Tribunal for the Law of the Sea (ITLOS) to determine the delineation of a disputed maritime border between Ghana and Ivory Coast in the Atlantic Ocean. Tullow then in December 2016 unilaterally terminated the rig contract.

Seadrill filed counterclaims in the Commercial Court in London against Tullow Ghana Limited (TGL) seeking a declaration that TGL was not entitled to terminate the West Leo rig contract for force majeure.

In its claim, Seadrill was seeking payment of $277 million from Tullow, before interest and costs. The case was heard by The Hon. Justice Teare in May 2018 and the judgment is expected to be handed down shortly, Tullow said in a statement on Thursday, June 28.

If Seadrill is successful in its claims, Tullow expects that any resulting liabilities will be shared amongst the TEN joint venture partners, where the rig had operated at the time, and Tullow’s estimated share has been recognized in a provision.

Tullow is the operator of the TEN field with a 47.18% interest and its partners are Kosmos Energy (17%), Anadarko (17%), GNPC (15%), and Petro SA (3.82%).

It is worth mentioning that the International Tribunal for the Law of the Sea in September 2017 made a final ruling resolving a maritime dispute concerning delimitation of the maritime boundary between Ghana and Ivory Coast. The tribunal found that Ghana did not violate the sovereign rights of Ivory Coast by conducting oil and gas activities in the disputed area. This decision allowed Tullow to restart the development drilling in the TEN fields and take the fields towards their full potential.

In related news, Tullow recently hired a second rig to work on its drilling program offshore Ghana, in addition to the Maersk Venturer drillship, which is already working there.

The Maersk Venturer began operations in Ghana in March 2018 and three wells have been drilled in the first half of the year; a production well in the Ntomme area of TEN and two production wells at Jubilee.

Kosmos disputes its share 

Separately, the U.S. oil company Kosmos Energy is disputing, through an arbitration against Tullow Ghana before the International Chamber of Commerce, its share of liability (c. 20%) of costs related to the use of the West Leo rig beyond October 1, 2016.

This arbitration hearing took place in January 2018 and the tribunal’s decision is also expected shortly, Tullow informed.

In the event that TGL is unsuccessful in defending the Commercial Court claims by Seadrill, the arbitration decision will determine whether Kosmos is liable for its share of the amounts payable to Seadrill.

Offshore Energy Today Staff