Tullow on the hunt for a partner to share Kenya’s oil risks
Tullow Oil is searching for a strategic partner to share the responsibility of securing the financial resources required and shouldering any emerging risks in harnessing Kenya’s oil wealth in Turkana County.
According to the company, unlocking billions in revenue from Project Oil Kenya now depends on the UK-based explorer finding a strategic partner to share the investment risk and capital burden.
Appearing before the Senate Committee on Energy, Tullow Oil executives noted that securing project financing remains the next hurdle for the company.
“Tullow submitted a Field Development Plan (FDP) in March 2023 and we are working on final revisions following feedback from EPRA. Upon reaching final approval, we can commence critical workstreams to enable the project to reach a final investment decision (FID),” noted Tullow Kenya BV Managing Director Madhan Srinivasan.
In their financial disclosures for the FY ending December 31, 2023, Tullow Oil noted that Kenya’s energy regulator EPRA had “engaged third-party consultants to review the revised FDP and the current review period ends on 30 June 2024.”
FDP is a document that demonstrates how an oil company plans to develop a petroleum field and undertake environmental management for the immediate population while also offering projections on costs related to the production of hydrocarbons.
Read also: Tullow Oil readies Sh1.43Bn investment in Kenya this year
Capacity of Turkana oil fields
In March this year, The East African reported that British petroleum consultancy Gaffney, Cline & Associates saw the entities involved in Turkana oil production revise the capacity of the oilfields to 120,000 barrels of oil per day (bopd), up from 70,000 bopd disclosed earlier.
While appearing before the lawmakers, Srinivasan said unlocking value from Kenya’s discoveries remains a key catalyst for Tullow. He noted that the company is confident the development of the hydrocarbons can reshape Kenya’s energy industry, bringing both financial and social benefits.
“Tullow has a robust financial position and has generated over $1 billion of free cash flow between 2020-23, with a further $200-300 million expected in 2024,” he said.
At a session chaired by Senator Wamatinga Wahome, Mr Srinivasan noted that Tullow is building a better future through responsible oil and gas development.
Srinivasan, while appearing with the firm’s country manager, Mr Franklin Juma, and commercial manager, Mr David Kombe, the executives presented the firm’s experience in Ghana, saying that over the past four years, the new management team in Tullow has achieved a major operational turnaround, resulting in higher operating and capital efficiency, and reduced operating and drilling costs.
“Tullow has operated the Kenyan assets and spent over $2 billion since the first discovery in 2012, which returned a discovery of 585 million barrels of oil. Tullow continues to be committed to bringing broader social benefits from its operations, such as community water boreholes, which continue to benefit around 20,000 households per year,” he told the committee.
Kenya discovered oil in Turkana County in 2012. The find by the Anglo-Irish explorer Tullow Oil gave rise to optimism that East Africa’s largest economy could start earning oil billions. Soon after, Kenya introduced new rules to share revenues from natural resources as part of a broader plan to firm up county government structures.
