Tullow halts Turkana operations over insecurity

Truck transporting the first consignment of crude oil from Lokichar, Turkana. [File, Standard]

Tullow Oil has stopped work at its Kenyan oilfield and halted trucking operations due to security issues, Chief Executive Paul McDade told Reuters on Wednesday.

Tullow is aiming for a final investment decision on its $2.9 billion (Sh290 billion) project in late 2019, which would open up the country’s oil industry to exports.

Protests and security problems have halted a pilot scheme which currently trucks around 600 barrels of oil per day to Mombasa before a pipeline is built, which should be operational by 2022.

“What you saw locally was the local people, the community... using the trucking operation as a lever, really, to demonstrate to the national government that the security situation on the ground had to improve,” Mr McDade said. “It’s not a big issue for us.”

“We’d expect to be up there working, getting the field back operating again and trucks moving again in the near future. But it’s important to take the time out so that when we do return... we have a more secure environment.”

Tullow is targeting production of at least 100,000 barrels of oil per day after first oil in 2021/22.

The firm last week said the stalemate with the local community could have cost it as much as Sh200 million so far, as it pays for the leased equipment that is idle on site.

It added that it would shut down its Lokichar base in the next one-and-a-half weeks as essentials were running out.

Tullow also said it will export the first crude oil cargo by March next year despite the challenges it has faced. “The first lifting of low sulphur Kenyan crude oil from Mombasa is expected in the first quarter of 2019,” said the company.

“The pilot is a data gathering exercise and it is about lessons. There were some distractions to trucking over the last couple of weeks and these are exactly the type of issues that we are trying to flush out,” said McDade.

[Reuters, with additional reporting by Macharia Kamau]