The oil volume resources in Turkana will determine Tullow's future investment plan in Kenya.
An audit by UK consulting firm– Gaffney Cline Associates (GCA) is underway to inform the decision to be taken by the oil firm. The current stable global crude prices is also expected to weight in.
The audit comes ahead of a detailed project plan discussions with the Kenyan government, which it says will be “over the coming months.”
Gaffney, Cline & Associates is a petroleum consulting company headquartered in Alton, the United Kingdom, with offices in London, Houston, Singapore, Buenos Aires, Sydney and Moscow.
Its audit comments are expected to define the final commercial development decision for Tullow and its Joint Venture partners on the Turkana based oil fields, which will shape Kenya's future of going commercial on its oil reserves.
“The technical work is complete, and the resource volumes are being audited. Tullow and its JV Partners expect to provide a project update to the market in the second half of 2021,” it says in its latest trading and operational update.
This comes as the firm ramps up its operations in Africa, with Kenya being among its key exploration base, amid picking crude oil prices.
In April last year, oil prices dropped to a 20-year low, touching $15.98 (Sh1,729 ) a barrel— its lowest point since mid-1999.
Yesterday, Brent crude was quoted at a high of $74.70 (Sh81.08), as oil producing countries move to cut supply to manage prices.
“Tullow has made excellent operational and financial progress in the first half of 2021.. now has a strong financial footing and we are making very good progress in delivering on our highly cash generative business plan and continuing to reduce our debt, ” said Rahul Dhir, CEO, Tullow Oil plc.
Group working interest production in the first half of 2021 averaged 61,200 barrels of oil per day(bopd), a common unit of measurement for volume of crude oil, which it says is in line with expectations.
Full year 2021 guidance has been revised to 55,000 - 61,000 bopd (from 60,000 to 66,000 bopd).
The guidance reflects the sales of the Equatorial Guinea assets and the Dussafu Marin permit and first half delivery.
“The Kenya project has been through a full redesign using data from the 2018 -2020 Early Oil Pilot Scheme (EOPS) being fed into the model which is providing better understanding of both the resource and the optimum development plan,” the firm notes.
Oil reserves in the Lokichar sub-basin are estimated at over 4 billion barrels with full production potential estimated at 100,000 barrels per day, by 2024.
However, reaching the full capacity will require investments in infrastructure including drilling and pipelines.
EOPS production of more than 350,000 barrels of oil from the Ngamia and Amosing fields provided six months’ sustained rate and pressure data, according to the company.
In September 2020, the Kenyan government agreed to an initial extension for the 10BB and 13T licence blocks until December 31, 2020 following approval of the 2021 work programme and budget.
It granted a full extension until December 31, 2021 by which date the Group is required to submit a Field Development Plan.
Petroleum and Mining Cabinet Secretary John Munyes however notes the Covid-19 pandemic has slowed down exploration works, which could push Kenya’s hopes of becoming a net exporter from an initial target of 2022 to 2024.
Meanwhile, the government is pushing for the construction of the 824km Lokichar-Lamu oil pipeline.
