Licence hopes at Tullow Oil

Tullow Oil is confident of being awarded a major interest in two highly sought-after exploration blocks in Bangladesh and expects an announcement of the licence awards shortly, chief executive Mr Aidan Heavey said yesterday.

The expectation of a successful licence award in Bangladesh has been the main factor behind heavy trading in Tullow shares in recent months, although the awarding of the licences has been delayed by a dispute between Tullow and two American oil giants, Chevron and Texaco, over the stake each company would have in the two prime licences, blocks 9 and 12.

Mr Heavey said he expects Tullow to get the 45 per cent stake in the concessions that it has sought, with smaller stakes for Texaco, Chevron, Mobil and Petronas. Tullow sought the licences on the basis that it would be the operator for the consortium and Mr Heavey said that he expects the licences to be awarded on that basis.

The Bangladesh licences have been the focus of intense competition from oil companies, and it will be a major development for Tullow if it manages to get a 45 per cent stake in two of the most sought-after concessions. That and the start of production for its Pakistan gas development later this year will transform the company, say analysts.

Once this happens, then Tullow will move to sell off its smaller exploration interests and focus on its interests in the Indian sub-continent and Africa, said Mr Heavey. Assets that are likely to be sold include Tullow's onshore gas interests in the UK, he added.

Last year, Tullow boosted its turnover by over 5 per cent to £6.2 million although there was a marginal fall in profits before exploration costs from £3.3 million to £3.1 million. Tullow also wrote off almost £3.4 million against unsuccessful exploration costs to produce a pre-tax loss of £222,335. In the previous year, only £971,164 of unsuccessful exploration costs was written off, allowing Tullow to report a 1996 profit of £2.3 million.