Namibia Operations and Licences

Operations

Tullow holds an operating interest in Production Licence 001 over the Kudu gas field located 170km offshore the south-west coast of Namibia.

The initial development concept for the Kudu gas field was based on supplying gas to an 800 MW base load power station developed and operated by NamPower, the Namibian state-owned power company, with electricity in excess of Namibia’s requirements being absorbed by the South African market. However, recent developments in power generation priorities in the region and the emerging potential for supplying gas into the industrial and transport markets as a replacement for diesel, HFO and LPG, have provided alternative development options. The fast maturing marine CNG technology offers the means for these options to be seriously considered. Technical and commercial studies are currently being conducted to confirm the viability of these options. 

Whilst development of the Kudu main field area remains the key area of focus, Tullow is also committed to proving and commercialising the potentially significant reserves upside within the Production Licence area.  The Kudu-8 well, drilled in 2007, targeted sands in the Kudu East area, originally tested by Kudu-5. The well encountered gas bearing reservoir but it was found that poor reservoir permeability precluded commercial flow rates at that location. Current exploratory appraisal efforts are now focused on locating extensions of the Kudu main field reservoir within the Production Licence.

In advance of the Kudu-8 well Tullow sold a 20% interest in the Production Licence to Itochu Corporation of Japan.  To earn the 20% interest, Itochu are paying 40% of the cost of two exploratory appraisal wells to investigate the significant upside potential of the Kudu field.  In addition, under the terms of the transaction, Itochu will make further financial payments depending on the ultimate volume of reserves developed and will provide Tullow with beneficial development financing for the project.

Licences

Licence	Fields	Area Sq Km	Tullow Interest	Operator	Other Partners
Production Licence 001	Kudu	4,567	70.00%	Tullow	NAMCOR, Itochu