Tullow Oil Concludes Agreement for Kudu Gas Field

Tullow Oil's subsidiary, Energy Africa, which operates the Kudu gas field with a 90% interest, has concluded a Joint Development Agreement with NAMCOR, the National Petroleum Corporation of Namibia, its 10% partner in the field, and NamPower, the Namibian power utility company, in relation to the planned development of the Kudu field as part of a gas to power project. This agreement represents the successful culmination of the initial project phase, which was primarily aimed at demonstrating the commercial viability of the Project.

The Project involves the offshore development of the Kudu gas field by Energy Africa and NAMCOR, and the piping of gas to shore for treatment and delivery to an 800MW power station to be developed and commercially operated by NamPower in the vicinity of Oranjemund. The produced electricity will be sold to NamPower, for resale into the Namibian market and to Eskom for the South African market. NamPower and Eskom have signed an agreement to enter into negotiations to conclude power purchase agreements and additional agreements under which Eskom will assist and support NamPower in the operation and maintenance of the power station and provide other technical support during the development and commercial operation of the power station.

The primary objectives of the next phase of the Kudu gas field development, which has already commenced, are to confirm the viability of the Project, to complete detailed engineering and design work and to procure appropriate financing for the Project, leading to a final investment decision by the end of 2005.

Rhidwaan Gasant, Managing Director of Energy Africa said: 'This Agreement represents a significant milestone in commercialising the proven gas reserves in Kudu and in proving up additional reserves, potentially unlocking significant value for the Tullow group. We have been able to achieve this largely through the excellent co-operative working relationship established with NamPower, NAMCOR and Eskom'.

Aidan Heavey, Chief Executive of Tullow Oil said: 'We are encouraged by the progress achieved in relation to the planned Kudu gas field development, which we are confident will be an important contributor to our objective of achieving significant organic growth for the enlarged Tullow group.'