State inaction on Tullow plan approval to delay oil project

Tullow employee breaks a seal from a truck ferrying crude oil from Lokichar, Turkana, June 2018. [Maarufu Mohamed, Standard]

Kenya's dream of becoming an oil producer faces further delay following the government's postponement of a decision on the plan by Tullow that would guide the development of its Lokichar oil fields in Turkana County.

Approval of the Field Development Plan (FDP) would see Tullow granted an oil production licence, setting the stage for the start of the commercial phase of the project.

Tullow Oil is also yet to secure a strategic partner, which would mean that even with the government's approval, the development of the oil fields would still face delays with a new investor to inject capital into the project.

Tullow Oil on Wednesday disclosed to shareholders that the Energy and Petroleum Regulatory Authority (Epra) has extended the review period for the FDP. The plan, which charts the way forward for the project, had been submitted to Epra in December 2021. An updated FDP was submitted in March last year.

The Energy and Petroleum Ministry had previously said Epra would give the verdict on the FDP - either approve it or return it to Tullow for modification - by September last year.

"On March 1, 2024, Tullow received a letter from the Epra extending the review period of the updated Field Development Plan to 30 June 2024," said Tullow when it published its results for the year to December 2023.

During the year, the firm reported a loss after tax of $110 million (Sh15.7 billion) from a profit of $49 million (Sh7 billion) a year earlier.

After Epra is done with the FDP, it will then go to the Ministry and later Parliament for further review.

"Once their evaluation is concluded, the FDP will be submitted to the Cabinet Secretary for Energy and Petroleum for review before submission to Parliament for final approval," said Tullow.

"(Epra) has engaged third-party consultants to review the revised FDP and the current review period ends on 30 June 2024. The Group expects a production licence to be granted once government due process has been completed."