British exploration firm, Tullow Oil has assumed full ownership of the Kenya oil project after its joint venture partners Africa Oil Corp and Total Energies exited the project.
Tullow said that it has 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 percent to 100 percent.
“The board considers that owning 100 percent 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. This is a low-cost development project that has the potential to unlock material value for Kenya” the British firm said.
“The prospective strategic partners have been informed. They remain engaged and detailed farm-out discussions continue with a number of companies. Whilst the process has taken longer than expected, Tullow remains focused on securing a strategic partnership this year” Tullow added.
The British exploration firm said progress continues on the Turkana oil project following the submission of an updated Field Development Plan (FDP) to the Energy and Petroleum Regulatory Authority (EPRA), in March this year.
The approval of the FDP—which will need to be ratified by Parliament —will enable Tullow to get a government license to commence commercial drilling of crude oil in the 10BB and 13T oil blocks in Turkana County.
The revised FDP followed the revelation that the commercially recoverable oil from the reserves is significantly larger than previously estimated.
An audit by British petroleum consulting firm Gaffney, Cline & Associates led the firms to revise the production capacity of the oilfields to 120,000 barrels of oil per day (bopd), up from previous estimates of 70,000 bopd.
This saw the revision of the FDP that has increased the size of the crude oil processing facility in Turkana and the size of the pipeline to evacuate the oil to Lamu, increasing the projected cost of the project from Sh319 billion to Sh377 billion.
The revised FDP also increased the diameter size of the planned Lokichar-Lamu crude oil pipeline from 18 inches to 20 inches to handle a higher product volume and drilling of additional exploration wells.
The State has apportioned Sh2.4 billion over the next three financial years for preparatory work for the Lokichar-Lamu crude oil pipeline, signalling a determination to tap oil cash.
A budget schedule by the National Treasury showed that Sh651.26 million has been apportioned for research, feasibility studies, project preparation, and design of the pipeline in the new financial year starting in July.
Funding for the preparatory activity on the planned crude pipeline will rise to Sh872.68million and Sh878.35million in the 2024/25 and 2025/26 fiscal years, respectively—marking renewed financing for the venture that wasn’t allocated any cash in the current financial year.
