JOB LOSSES

Tullow Oil Kenya to sack at least 260 in restructuring plan

The firm has faced several operational challenges in the country, leading to huge losses.

In Summary
  • Among those set to lose jobs are 14 senior project managers whose roles will be handled by the London office.
  • Last week, the firm hinted of plans to exit the country, citing frustrations from the government that have delayed the project.
Tankers that transported crude oil from Turkana County at the Mombasa Oil Refinery in Changamwe, June 6, 2018.
Tankers that transported crude oil from Turkana County at the Mombasa Oil Refinery in Changamwe, June 6, 2018.
Image: ANDREW KASUKU

At least 260 employees of Tullow Oil Kenya will lose their jobs in a reorganisation plan by the British oil firm seen by the Star.

The company which has been conducting activities in Turkana since 2012, on Wednesday, announced plans to layoff part of its 650 staff in the country but withheld information of the number of employees to be affected.

However, in the planned changes, the firm will be sending home 40-45 per cent of employees, putting the number of victims at between 260 and 290.

 

Among those set to lose jobs are 14 senior project managers whose roles will be handled by the London office.

They include project managers mid and upstream, environment manager, constructions and logistics manager, well engineering manager, sustainability advisor among others.

Globally, the firm was planning to cut a third of its staff to slash its administration costs by a fifth, or around $20 million (Sh2billion), after weak output in Ghana, delays in East Africa and lower-than-hoped-for oil quality in Guyana.

This is expected to see Tullow cut its annual net administration costs by around a fifth to $80 million (Sh8 billion).

Last week, the firm hinted at plans to exit the country, citing frustrations from the government that has delayed the project.

Last year, the oil multinational pushed its target for making the critical Final Investment Decision to 2020 after it emerged that, among other issues, the National Environmental Management Authority (Nema) had delayed its issuance of licences.

The firm has faced several operational challenges in the country, leading to huge losses.

 

Kenya's Petroleum principal secretary Andrew Kamau told journalists that the project had incurred Sh50 million in delay costs by August last year.

"The longer it takes to recover costs, the longer it will take to earn returns on investment,’’ Kamau said.

In 2018, the firm was forced to halt operations for more than a month following a standoff between the government and the Turkana community over revenue sharing structure and ob opportunities for locals

They had demanded for a total revenue allocation of 30 per cent: 20 per cent to counties and 10 per cent to community and the remaining to the national government.

However a sharing formula of 70: 25: 5 ratio for national government, county and community was struck.

Just weeks after President Uhuru Kenyatta flagged off the first 600 barrels of oil under the Early Oil Pilot Scheme (EOPS), the community issued fresh demands, halting transportation of oil to Lamu.

The company has prepared lucrative packages for the affected staff.

They will for instance receive redundancy pay equivalent to one month salary for each year of service.

Accrued leave days will be paid as part of the exit package. In addition contractual benefits such as medical and gym will continue be retained until December 20.