Tullow Oil PLC (LON:TLW) has confirmed it has a problem with damaged equipment on a floating production and storage and offloading (FPSO) vessel operating at the Jubilee field, offshore Ghana.
New arrangements are being put in place, and Tullow said production operations can resume in about two weeks and it will take further time beyond that for production to ramp-up once it comes back online.
The oil firm said it will re-issue production guidance for the year to investors once production rates have stabilised.
Tullow emphasised that it has a comprehensive insurance, including cover for the damage to the FPSO and separately for loss of production and revenue. It added that claims for both have been made with its insurers.
“Given the ability to continue production and because we have the appropriate insurance policies in place, we do not expect that this issue will have a material impact on our revenue,” said Paul McDade, Tullow chief operating officer.
"We are focused on resolving this issue with the bearing on the FPSO Kwame Nkrumah in a timely and safe manner.
“We have appointed a highly experienced project team to work on a permanent solution while our operations team continues to ensure we have in place safe and sustainable arrangements for production from the field.”
Providing further detail, Tullow explained that new operating procedures are now being implemented. As part of that it will now use a shuttle tanker with capacity of 250,000 barrels of oil, as well as a storage tanker with capacity of 1 million barrels of oil.
Tullow highlighted that 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,” the company said.