More drilling for Kudu gas reserves

A JAPANESE company has joined efforts to get the long-awaited development of the Kudu gas field off the Namibian coast on course by signing an agreement to drill two new wells in the Atlantic Ocean in order to establish more gas reserves.

Itochu Corporation, which is the new partner of British company Tullow Oil, signed the agreement with the Ministry of Mines and Energy yesterday. Tullow, through its wholly owned subsidiary Energy Africa, holds a 70 per cent stake in the Kudu production licence.The Namibian Petroleum Corporation (Namcor) owns 10 per cent.”The Kudu project is important to Namibia and we hope that the fruits of this will directly contribute to the economy of this country,” said Hisato Okubo, general manager for natural gas projects at Itochu.According to Andrew Windham, MD of Tullow Oil Africa Region, his company remains fully committed to the Kudu project.”It might also involve surplus gas produced from the power station supplied via a pipeline to South Africa.Discussions necessarily involve Eskom, who would buy the gas, and the Petroleum Company of South Africa (PetroSA), who would have the responsibility for building the pipeline,” Windham said.Mines and Energy Minister Erkki Nghimtina noted that a gas storage facility was also under discussion: “Talks on the N$5 billion Kudu gas project will now also consider sharing a gas storage facility (and sharing its construction costs) with South Africa.Selling the surplus gas to our neighbour will bring additional revenue for our country.”Tullow Oil sold a 20 per cent stake in the licence to Itochu two months ago.To earn its interest, Itochu will pay 40 per cent of the cost of the two new wells.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 financing for the Kudu Project.The objective of the new drilling is to establish commercially viable flow rates from the Kudu reservoir, where five test wells have already been drilled.A drilling rig, the Pride South Seas, arrived in the area recently.The drilling of each new well is expected to take about 80 days.In July 2004, Tullow concluded a Joint Development Agreement for the development of the field as part of a gas-to-power project that will bring the gas onshore for treatment and delivery to an envisaged 800-megawatt (MW) power station at Oranjemund.Discovered in 1974, the Kudu field is about 170 metres below the sea surface.Tullow, through its wholly owned subsidiary Energy Africa, holds a 70 per cent stake in the Kudu production licence.The Namibian Petroleum Corporation (Namcor) owns 10 per cent.”The Kudu project is important to Namibia and we hope that the fruits of this will directly contribute to the economy of this country,” said Hisato Okubo, general manager for natural gas projects at Itochu.According to Andrew Windham, MD of Tullow Oil Africa Region, his company remains fully committed to the Kudu project.”It might also involve surplus gas produced from the power station supplied via a pipeline to South Africa.Discussions necessarily involve Eskom, who would buy the gas, and the Petroleum Company of South Africa (PetroSA), who would have the responsibility for building the pipeline,” Windham said.Mines and Energy Minister Erkki Nghimtina noted that a gas storage facility was also under discussion: “Talks on the N$5 billion Kudu gas project will now also consider sharing a gas storage facility (and sharing its construction costs) with South Africa.Selling the surplus gas to our neighbour will bring additional revenue for our country.” Tullow Oil sold a 20 per cent stake in the licence to Itochu two months ago.To earn its interest, Itochu will pay 40 per cent of the cost of the two new wells.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 financing for the Kudu Project.The objective of the new drilling is to establish commercially viable flow rates from the Kudu reservoir, where five test wells have already been drilled.A drilling rig, the Pride South Seas, arrived in the area recently.The drilling of each new well is expected to take about 80 days.In July 2004, Tullow concluded a Joint Development Agreement for the development of the field as part of a gas-to-power project that will bring the gas onshore for treatment and delivery to an envisaged 800-megawatt (MW) power station at Oranjemund.Discovered in 1974, the Kudu field is about 170 metres below the sea surface.