North Sea explorer Tullow has been forced to shelve a major oil project off the African coast after a corruption probe was launched into one of their partners.
The oil firm has declared force majeure on the project off Guinea after US justice chiefs launched an investigation into Hyperdynamics, one of the other companies sharing the block.
Tullow had been set to start drilling on the block off the West African coast by the end of the month, but has now warned the country’s government it will not be able to meet contractual obligations.
The news comes as the US Department of Justice and the US Securities and Exchange Commission launch a probe into Hyperdynamics over the acquisition and retention of exploration rights in Guinea.
“Tullow has decided that it cannot proceed with activities on the licence until these issues are resolved,” a spokesman for the oil firm said today.
“Tullow hopes for a speedy resolution to these issues and looks forward to continue operation with its partners in Guinea.”
Guinea, one of the poorest nations in Africa, has been urging G8 countries to investigate corruption in oil licencing.
Aberdeen-based Dana Petroleum farmed into the project in 2010, before their purchase by Korea’s National Oil Corporation, to take a 23% stake in the field, which covers more than 18,000 square km off the West African country’s coastline.
Tullow paid £16million in 2012 to take a 40% controlling stake in the project from Hyperdynamics. It is also set to cover the costs of an exploration well on the concession, up to a total spend of $100million.
Hyperdynamics has admitted it faced fines and “civil and criminal penalties” if violations of the Foreign Corrupt Practices Act were uncovered.
The Houston-based firm said it has launched an internal inquiry and was cooperating with the US government.
The company confirmed force majeure had been declared on the project, and said in a statement: “Hyperdynamics is unable to predict the outcome or timing of the results of Tullow’s assertion of the force majeure.”