Tullow submits plan for Turkana oil fields

 

A drilling rig at the Ngamia-1 well in the Lokichar Basin, Turkana County operated by British exploration firm Tullow Oil [File]

Tullow Oil has submitted a plan to the government detailing how it will develop the oil fields in Turkana County.

This comes as analysts say Kenya’s fledgling oil and gas industry could experience delays in decision making by government entities as the country heads towards the General Election in August.

Tullow said in an operational update yesterday that it submitted the field development plan to the Petroleum ministry in December.

The plan was part of the requirements by the ministry when it extended the company’s exploration licences in late 2020.

The firm also said it is still searching for a strategic partner that is expected to play a critical role in enabling the project to move to commercial phase.

“In December 2021, as per the licence extension obligations provided by the Government of Kenya in September 2020, the Project Oil Kenya Joint Venture Partners (Total Energies and Africa Oil) submitted a field development plan for the 10BB and 13T licences, including the additional exploration and appraisal opportunities within the 10BB and 13T licences,” Tullow said in the update.

“The exploration and production plan for 10BA was also submitted. The JV Partners continue to seek a strategic partner for this project and constructive discussions continue with interested parties.”

Sell stake

The companies have in the past said they planned to sell about half of their combined stake to the strategic partner.

The new firm could also take over the day-to-day operations of the project in the Lokichar basin.

Tullow Oil, with a 50 per cent stake in the Lokichar oil block, is the project operator while Africa Oil and Total Energies have a 25 per cent stake each.

In its statement, Tullow said it planned to spend an estimated $5 million (Sh565 million) in its work in Kenya over 2022.

This is substantially lower compared to Ghana where the firm has lined up $370 million (Sh42 billion). It is already producing oil in the West African country.

The firm last year said the Kenyan project will require a capital expenditure of $3.4 billion (Sh384 billion) that will be used in constructing a crude oil processing facility in Lokichar and an export pipeline to Lamu.

Analysts at the Kenya Civil Society Platform on Oil and Gas (KCSPOG) said this year’s elections could slow down decision making within government, which might further delay oil exploration activities.

“The upcoming elections pose challenge for the upstream petroleum sector. Election years are usually marred by delays in government services, especially if there is a leadership change in the respective ministries,” said KCSPOG in an outlook for the local oil and gas industry.

“Delayed government services could also slow down exploration and decrease investor interest.” 

The lobby also noted that the recent commencement of exploration work in offshore blocks by Italian firm Eni had potential to enhance its position as an emerging oil province.

Eni started drilling at block l11b, where it is in a joint venture with Total Energies and Qatar Energy, in late December.

The block is 170 kilometres from the coast and was in 2014 drilled by America’s Anadarko Petroleum, which showed existence of a petroleum system.