Members of Parliament have given the Energy ministry and British firm Tullow a deadline of June 30, 2025 to finalise field development plan (FDP) for the Turkana oil field in a push to hasten commercialisation of Kenya’s crude reserves.
The National Assembly’s Liaison Committee, in its report on the 2025/2026 Budget Policy Statement, also asked the ministry and Petroleum Regulatory Authority (Epra) to fast-track onboarding of a strategic investor in the Turkana venture.
Tullow, which struck oil in Lokichar in 2012 after exploratory drilling, has said the future of the project is dependent on its onboarding of a strategic investor (for financial reasons), following exit of its two joint venture partners TotalEnergies and Canadian company Africa Oil Corp in May 2023.
Development of the oilfield and a pipeline requires the government to approve Tullow’s FDP, which outlines the company’s plans to manage the impact on the environment and society, and give forecasts for production and costs.
A journalist takes a clip of oil storage tanks at Ngamia II oil fields in Lokichar, Turkana County, May 25, 2018.
Photo credit: File | Nation Media Group
“…That the Cabinet Secretary in charge of Energy and Petroleum, in conjunction with Epra fast tracks the onboarding of a strategic investor and the review and approval of the Field Development Plan for South Lokichar oil fields and submits the same to Parliament for consideration by June 30, 2025,” said the Liaison Committee in its report, which was tabled before the House on Tuesday.
Tullow, together with its former JV partners, had in March 2023 submitted a final FDP on the Kenya project for approval by the Energy ministry, but this was sent back for improvement.
Tullow—now the sole owner of the prospect— presented a revised FDP in March 2024 to the government, but this one was also rejected on concerns by the State about the gap between Tullow’s asset value and the billions of shillings needed to commercialise the Lokichar prospect. The government then gave Tullow a six-month extension (until December 2024) to address the gaps in the new FDP. The Energy and Petroleum Ministry said that Tullow had failed to show how it would plug the financial gap given its asset value relative to the billions needed to fully commercialise the reserves within the oil fields in Turkana. The ministry also cited gaps in the technical capability of Tullow following last year’s withdrawal of Africa Oil and Total, who unconditionally ceded their combined share of 50 per cent.
Tullow valued its net assets in Kenya at $248.6 million (Sh32 billion) at June 2024 but has over the years been writing down the value of these assets in recent years on account of doubts about the progress of the prospect to full production.
The impairments, which include a $410 million write-down in 2020, primarily related to uncertainty about the company receiving and finalising an acceptable offer from a strategic investor, obtaining financing for the project, and getting the government to deliver on the required infrastructure and fiscal terms to make the project viable.
The company’s expectation though is that if the uncertainties are resolved, it will be able to write back all the impairments.
Last month, the government signalled some optimism about the project by issuing a call for a consultant to guide the development of a resettlement and compensation plan for people displaced by the construction of an oil pipeline from Turkana to Lamu.
The resulting legal framework will guide engagements between the government, communities, and oil firms when there is a need for compulsory acquisition of land for pipeline development.
