London – British Africa-focused and London-listed Tullow Oil has declared force majeure on its offshore exploration block in Guinea following a U.S. regulatory investigation of its project partner Hyperdynamics Corporation.
Guinea, one of Africa’s poorest nations despite abundant natural resources, has urged the G8 countries to help it trace crooked deals in a bid to crack down on corruption. The U.S. Department of Justice and the U.S. Securities and Exchange Commission are investigating Hyperdynamics’ activities in obtaining and retaining concession rights in Guinea.
In parallel, Guinea previously indicated that Hyperdynamics’ rights to nearly a third of the country’s offshore oil blocks would form part of a review into opaque deals that also included BSG Resources’ rights to develop half of the giant Simandou iron ore concession. “Tullow has decided that it cannot proceed with activities on the licence until these issues are resolved. Tullow hopes for a speedy resolution to these issues and looks forward to continue operation with its partners in Guinea,” a Tullow Oil spokesman said.
Hyperdynamics and Tullow are exploring an 18,750 square kilometres (7,239 square mile) area off the African coast along with Korea National Oil Corp’s Dana Petroleum. Tullow Oil said last month that it was planning to start drilling off Guinea together with its partners in the second quarter of 2014.
Tullow Oil took over operations at the concession in April 2013 after acquiring a 40 percent stake in the project from Hyperdynamics’ subsidiary SCS Corporation. Hyperdynamics said in a statement on Wednesday that it was unable to predict the impact and timing of Tullow’s force majeure declaration.
Hyperdynamics Chief Executive Ray Leonard said in October that the investigations would not affect the company’s ability to explore the massive oil concession off the coast of Guinea. Shares in Tullow Oil traded down 1.24 percent at 1127 GMT and Hyperdynamics closed at $5.26 on the New York Stock Exchange on Tuesday.