Tullow assumes 100% Project Oil Kenya equity ownership

Global independent oil and gas, exploration and production firm Tullow Oil plc has acquired complete control of the Turkana County-based Project Oil Kenya development following the withdrawal of its two joint venture partners.

With the strategic exit of Africa Oil Corp and Total Energies from the Project, Tullow will assume a 100% equity position, subject to the Government of Kenya’s approvals and will continue its work with the Government and its host communities to make the region a significant energy-producing province.

While reiterating the firm’s commitment to progressing the development of the South Lokichar basin project, Tullow Kenya BV Managing Director Madhan Srinivasan disclosed that the firm is engaging strategic partners who have expressed an interest in the project based on its economic viability.

“Project Oil Kenya is a low-cost development project that has the potential to unlock material value. Prospective strategic partners remain engaged, and detailed farm-out discussions continue with a number of companies.” Srinivasan assured.

A communique from Tullow indicated that the firm had, been informed by its two minority partners of their intention to issue notices of withdrawal from blocks 10BB, 13T and 10BA in the South Lokichar Basin for differing internal strategic reasons.

“As a result, Tullow’s working interest in these blocks will increase from 50% to 100%. The Board considers that owning 100% of the project creates more optionality, gives Tullow more flexibility in the ongoing process to secure strategic partners, creates a simpler Joint Venture Partnership and streamlines project delivery.” Srinivasan said.

He said the project progress continues, and the updated Field Development Plan (FDP) was submitted to the Kenyan regulator, Energy and Petroleum Regulatory Authority (EPRA), in March 2023 and is now under review by EPRA. Tullow will continue to work collaboratively with the Government of Kenya and EPRA to get the FDP approved.

Following the withdrawal of the minority partners, Tullow’s net Project 2C contingent resources are expected to increase from 231 mmboe to 461 mmboe, taking the Group’s total contingent resources from 605 mmboe to 836 mmboe. Net capex guidance for 2023 in Kenya will increase from c.$10 million to c.$15 million, less than 5% of Group capex.

Tullow had notified its prospective strategic partners of the equity developments, who remain engaged as detailed farm-out discussions continue. “Whilst introducing strategic partners has taken longer than expected, Tullow remains focused on securing strategic partners this year.” The Tullow communique noted.

The Programme Based Budget of the National Government of Kenya for the year ending 30th June 2024, published last month by the National Treasury, indicates a Kshs 651.2 million budgetary allocation for the State Department for Petroleum geared at advancing Project Oil Kenya. The document also indicated that finalising the FDP process is a high priority within the programme.

The document currently in parliament indicates that: “In the medium-term 2023/24-2025/26, the State Department has prioritized programs and sub-programs intended to provide policy, the legal and institutional framework for exploration, development, production, and commercialization and ensure the security of supply of oil and gas products for sustainable development. In this regard, the State Department will finalize the Field Development Plan for the South Lokichar Oil field; review, demarcate and gazette a new Block Map in view of the anticipated bid rounds during the period; construct a water pipeline from Turkwel to the South Lokichar Oil field.”