Gulf Energy to pump over Sh780b into Turkana oil project

A truck ferrying the first crude oil consignment from Lokichar, Turkana, arrives at the Changamwe KPRL storage facility in Mombasa on June 7, 2018. [File, Standard]

Local petroleum exploration firm Gulf Energy is seeking to start the production of crude oil by December, even as it pledged to maintain international best practice in the process.

Gulf Energy E&P BV Chairman Francis Njogu described the project as the single most significant private-sector-driven upstream petroleum investment in Kenya’s history.

He made the remarks when he appeared before a joint session of the National Assembly’s Departmental Committee on Energy and the Senate Standing Committee on Energy, which have been undertaking a public participation exercise ahead of the project’s Field Development Plan (FDP) ratification. Njogu told the committee that plans are underway for the firm to invest nearly Sh6 billion in the project.

“At Gulf Energy, we are approaching this FDP as Kenyans with a view to creating as many jobs and business opportunities for Kenyans, starting with our Turkana host community, as are committed to positioning Kenya as an oil-producing country,” Njogu said. “We are very ready, and we have set December 1, 2026, as a target to produce oil, and we hope to expeditiously secure the FDP ratification.”

Kenya stands to gain big from the project, with the State projecting potential earnings between $1.05 billion (Sh136 billion) at $60 (Sh7,8000) per barrel and $2.9 billion (Sh377 billion) at $70 (Sh9,100) per barrel over the life of the project.

He was accompanied by the firm’s Group Chief Executive Paul Limoh, and Country Manager Franklin Juma, among other officials.

Njogu told the committee that their commitments are reinforced through social investments and strict adherence to the ring-fenced local content strategy, with the overarching goal of delivering long-term socio-economic benefits for Turkana County and Kenya as a whole.

“The South Lokichar project and the FDP we have presented to the government present a technically mature pathway to unlock Kenya’s largest onshore petroleum development in a shared prosperity model,” he said.

He insisted that Gulf Energy E&P BV is an indigenously owned company with strong financial resources to support capital-intensive projects, like the South Lokichar Oil Project and has established robust financial partnerships and active lines of credit with leading local and international banking and financial institutions.

“While the plan demonstrates a clear scheduling, phased risk reduction and strong economic rationale, Gulf Energy also reaffirms its commitment to operate transparently, safely and in full compliance with Kenyan legislation and international best practices,” he explained.

Njogu explained that the project-specific fiscal measures outlined in the FDP are essential to meeting the investment and bankability thresholds required for a Final Investment Decision.

He said the South Lokichar Development presents a strategic and time-sensitive opportunity for Kenya to convert a well-understood petroleum resource into long-term economic value.

Under the Petroleum Sharing Contract framework, the State retains full ownership and stewardship of the resource, while the contractor (Gulf Energy) provides the technical capability and risk capital needed to bring it to production.

He urged the joint parliamentary committee to recommend the project’s ratification, saying the current opportunity exists against the backdrop of a rapidly evolving global energy landscape, where the window for financing new upstream oil projects is narrowing.

“As a result, frontier oil projects such as South Lokichar must demonstrate strong economics, robust fiscal stability, and timely decision-making to remain competitive for capital. Any prolonged uncertainty risks placing Kenya at a disadvantage relative to other emerging oil provinces that are actively adjusting their fiscal terms to secure investment before this window closes,” he explained.

Parliament is expected to deliberate on the FDP and PSCs before deciding on ratification in the coming weeks.