British Oil firm Tullow has approved a budget targeting its Final Investment Decision (FID) in Kenya at the end of 2020.
The news comes amid uncertainty over the firm's operations in Turkana where the Early Oil Pilot Scheme (EOPS) remains suspended due to severe damage to the roads caused by adverse weather in the fourth quarter of 2019.
In January, Tullow announced plans to exit its equity stake in Project Oil Kenya, opening up questions into the country’s future oil exploits.
Reports indicate that the Anglo-Irish oil firm will be relinquishing its 50 per cent stake to China National Chemical Corporation (ChemChina), the entity that bought Kenya's first batch of crude in August last year.
Other multinationals seeking a piece of Tullow Oil Kenya are the Royal Dutch Shell and ExxonMobil.
Yesterday, the British Oil multinational confirmed its commitment to Kenya after announcing massive losses for the year ended December 2019.
''Tullow remains fully committed to Kenya, and the board has approved the requisite 2020 budget targeting a Final Investment Decision (FID) at the end of 2020,'' Tullow Oil said in a statement.
The FDI has been pending since mid last year over delays in submission of the Field Development Plan as well as securing Environmental and Social Impact Assessment (ESIA) licenses for upstream and midstream.
The firm has also been struggling to work with the government to secure access rights to land, water and project financing.
“This slow progress means that the target of reaching FID by year-end 2020 becomes more challenging,” Tullow said.
Last week, the London Stock Exchange-listed firm submitted its compensation bill to the government to a tune of Sh204 billion for its six years of oil exploration in the country.
Oil firms recover their exploration costs over the years once production and sale of the commodity start, which in Kenya’s case is planned for 2022.
Tullow’s production dropped four per cent with a post-tax loss of $1.68 billion (Sh172.15 billion), driven by write-offs in Kenya and Uganda.
This was largely driven by a scaling down of oil price expectations, from $75 per barrel to $65.
As a result, the firm will be slashing its staff numbers by around 35 per cent and operations centralised in London.
Tullow said net debt had been reduced by 42 per cent, which according to the firm remained “too high”.
“The company will shift to a more conservative model, with a more “proactive approach to portfolio management,” Tullow CFO Les Woods said.
