Gulf Energy has secured a Sh1.94 billion (USD 15 million) onshore drilling rig in the United Arab Emirates (UAE), clearing a critical hurdle as it pushes to deliver its first oil from the South Lokichar Basin in Turkana County by December 1, 2026.
Kenyan officials from the State Department for Petroleum, the Energy and Petroleum Regulatory Authority (EPRA), and the Turkana County Government are in Abu Dhabi to inspect and familiarise themselves with the state-of-the-art rig ahead of shipment, marking a decisive step toward unlocking the South Lokichar Basin’s oil wealth and boosting Kenya’s economic prospects.
The 1,500-horsepower rig was acquired from the Great Wall Drilling Company under a long-term lease arrangement ahead of the project kick-off. The local exploration and production firm expects to ship the rig from Abu Dhabi to Mombasa before the end of next month.
Gulf Energy E&P B.V. Chairman Mr Francis Njogu said it remains on course with the project delivery timelines. He said the company has entered into a contractual arrangement with GWDC to deliver, commission and operate the rig in the South Lokichar Basin under a performance-based model that will also incorporate active skills transfer.
Mr Njogu said the rig has previously been deployed on projects for the Abu Dhabi National Oil Company and has recorded an efficient and safe operating track record.
“At Gulf Energy, it is all systems go on the journey to deliver first oil by 1 December this year. Securing a modern onshore drilling rig marks a significant investment for the company, at a time when global demand for such equipment remains high, and mobilisation timelines are increasingly stretched,” he said.
The acquisition comes as the company awaits parliamentary ratification of its Field Development Plan (FDP) for the USD 6 billion South Lokichar project, which residents and leaders in Turkana say could transform the region through infrastructure development, jobs, business opportunities, revenue and improved social amenities.
Production Sharing Contracts
Recent public participation and stakeholder engagement forums convened by the joint energy committees of the Senate and National Assembly on the South Lokichar Field Development Plan and the Production Sharing Contracts for Blocks T6 and T7 exposed sharp divisions over proposed revisions to cost recovery terms.
An oil rig at Ngamia 1 where Tullow Oil Company is exploring oil, 25km from Lokichar in Turkana County.
A proposal to increase the cost recovery ceiling to 85 per cent for both blocks, up from 55 per cent for Block T6 and 65 per cent for Block T7, drew concern from community representatives and oil and gas experts, who warned that the framework could expose the State to opacity and inflated costs.
Community representatives and oil and gas experts warned that the current framework exposes the State to opacity and potentially inflated costs.
Gulf Energy said the Petroleum Act, 2019, provides for contractors to recover exploration and development costs, known as cost petroleum, before sharing the remaining production, also known as profit petroleum, with the Government and the local community.
The company argued that the proposed revision was driven by reduced recoverable resources, the need to enhance project bankability, the high-risk and capital-intensive nature of upstream oil development in Kenya, and the need to align with international best practice in comparable African jurisdictions for technically complex or high-risk projects.
According to Mr Njogu, the 1,500-horsepower rig has been deployed on projects for the Abu Dhabi National Oil Company and has recorded an efficient and safe operating track record.
Turkana County Government officials, led by County Secretary Richard Ekai and Director for Climate Change George Emase, said the visit followed a formal delegation by Governor Jeremiah Lomorukai and was intended to ensure the rig meets the highest industry standards before operations begin.
In a communiqué, Dr Ekai described the inspection as a critical component of quality assurance, performance evaluation and safety verification ahead of deployment to the South Lokichar Basin.
The team conducted a detailed technical assessment of the rig’s operational systems and safety mechanisms and issued recommendations to fine-tune readiness and ensure seamless performance once mobilised to Turkana.
Kenya stands to gain significant fiscal and economic benefits from the development of the South Lokichar Basin oil fields. The Government projects potential earnings of between USD 1.05 billion (at USD 60 per barrel) and USD 2.9 billion (at USD 70 per barrel), equivalent to Sh136 billion to Sh371 billion over the life of the project.
Appearing recently before a joint parliamentary energy committee during deliberations on the Field Development Plan and the Production Sharing Agreements between the Government of Kenya and Gulf Energy E&P B.V. relating to Block 7 (formerly Block 13T), Mr Njogu described the venture as the most significant private sector-driven upstream petroleum investment in Kenya’s history.
He said the company aims to uphold world-class standards, with a target of producing crude oil this year.
A scenic view of the roads in Lokichar town along the Lodwar-Lokichar-Kainuk-Kapenguria-Kitale-Eldoret road on February 16, 2026.
Photo credit: Jared Nyataya | Nation Media Group
He added that the indigenously owned firm has strong financial capacity to support capital-intensive projects such as South Lokichar and has established robust financial partnerships and active lines of credit with leading local and international banking institutions.
Meanwhile, Gulf Energy said it is addressing acute water shortages in oil-rich villages within the South Lokichar Basin affected by drought and insecurity.
Residents are accessing increased supply through a water reticulation system and bowsers delivering more than 250,000 litres daily for livestock and domestic use across Turkana South and Turkana East sub-counties.
The firm confirmed it is fully financing water infrastructure and services to Kodekode, Nakalei, Lowarengak, Lokori, Lotubae, Naiyenakatwan, Katilia, Kokito, Lokwamosing/Lopii, Kagitankori, Karoge/Lochwaa area – Etom field, Kerio, Kaakalel and Nakare Arengan.
