Tullow Oil caught in Thatcher drama

WHEN Tullow Oil bought Energy Africa earlier this year, it could not have predicted one of its oilfields would be caught up in a drama involving Lord Archer and Mark Thatcher.

But the acquisition saw Tullow get its hands on a minority stake in one of the few producing fields in Equatorial Guinea, the target of a failed coup that has gripped the nation.

Tullow's optimism about the potential interests in the oil-rich African State highlight that, whatever the failings of the alleged coup plotters a year ago, they knew how to spot an emerging economy.

Oil has surpassed cocoa as Equatorial Guinea's most important export after a string of major offshore discoveries and is on course to become one of Africa's biggest producers.

Since ExxonMobil discovered the huge Zafiro field off the island of Bioko, production has shot from just 17,000 barrels of oil a day to more than 320,000 and in turn caused the country's economic growth to rocket.

One analyst said: 'It's not in the Premier League like Angola and Nigeria, but Equatorial Guinea is in the First Division and is an up and coming West African play for the majors.'

US investment has poured into the region, with Marathon developing the Alba oil and gas fields and Amerada Hess taking on the Ceiba field, in which Tullow has a 15% stake.

Just three weeks ago, Amerada and London-listed Tullow agreed to invest $1.1bn (£612m) between them over the next three years to bring four more fields on line. And more will be spent by the industry as it looks to develop the country's billion barrels of proven reserves but critics wonder if the government will ever distribute it.

President Teodoro Obiang has few friends, given charges of corruption, human rights abuse and political oppression after a far more successful coup that swept him to power in 1979.

Tullow chief executive Aidan Heavey insists all companies in the region are operating responsibly and the speculation comes from the fact it is simply 'a small country with a lot of oil'.

The US Securities and Exchange Commission may disagree. It is probing five US oil firms over possible violations of laws prohibiting bribes to foreign government officials.

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