Tullow in the middle

The fight for oil is nothing new – ownership of oil commands tremendous wealth. Countries fight over the black stuff in wars, and perhaps less barbarically nowadays across a table. Individuals go after it in the hope of getting rich, as evidenced by the large number of independents that have popped up in the past couple of decades.

Mark Routh, CEO of Independent Oil & Gas, mortgaged his house to take a punt at his first venture, and more famously, Aidan Heavey sold his vintage car collection to start-up Tullow Oil…speaking of which, Tullow is now caught in the middle of a dispute between Côte d’Ivoire and Ghana on where to draw the maritime boundary.

On 27 February 2015, Côte d’Ivoire presented a formal application through the International Tribunal for the Law of the Sea (“ITLOS”) requesting Ghana to suspend ongoing exploration and exploitation activities in the disputed area, which includes the TEN development. A decision on the suspension is expected to be handed down by ITLOS by the end of April 2015. The full verdict on the boundary itself is not expected until the end of 2017.

The dispute between the two countries is not new; it is a continuation of a saga that began in 2010 when Côte d’Ivoire petitioned the UN to complete the demarcation of the maritime border. The petition was filed days after Vanco made the Dzata-1 oil discovery. This time, Côte d’Ivoire made its application to ITLOS as the TEN development is 50% complete and first oil becomes more certain. The two countries are still committed to finding a peaceful, diplomatic solution, however, the latest arbitration filing is likely to temporarily sour relations.

In the worst case scenario, Tullow and its partners will have to suspend the TEN development until the case is resolved. A temporary solution would be to allow the TEN development to continue and Ghana to reimburse Côte d’Ivoire its share of petroleum revenues should ITLOS rule in the latter's favour. Aside from drawing a firm boundary, an alternative solution would be to establish a Joint Development Area such as that between Senegal/Guinea Bissau and Malaysia/Thailand. What this case does once again show is that geology doesn't respect borders.