•Tullow and its Kenya Joint Venture (KJV) partners presented a revised FDP to the State in March last year in line with the licence extension conditions, derailing the process.
•The Energy Ministry had been expected to make a decision in September last year, which was then to be subjected to approvals by Cabinet and Parliament, but it failed.
Tullow will finally know whether to proceed to commercialise its oil blocks in Turkana by October, latest developments indicate, as government moves to make key decisions.
The energy sector regulator–Energy and Petroleum Regulatory Authority (EPRA) now says it will give its advice to the Energy Ministry and National Treasury by end of this month, following submissions by consultants engaged to review the British firm’s Final Field Development Plan (FDP).
Tullow and its Kenya Joint Venture (KJV) partners presented a revised FDP to the state in March last year in line with the licence extension conditions, derailing the process.
The Energy Ministry was expected to make a decision in September last year according to earlier indications by Cabinet Secretary Davies Chirchir, which was then to be subjected to approvals by Cabinet and Parliament, but it failed to meet the timelines.
“EPRA is reviewing the FDP and hope to give feedback by June 30,” director petroleum and gas Edward Kinyua said.
Cabinet will then have 30 days to approve before the process moves to Parliament for ratification, with MPs having a window of between 60 and 90 days to give the final node.
This means the earliest Tullow will know if Kenya is keen to pursue or drop the project is between September and October this year, before it makes the Final Investment Decision.
Meanwhile, the government is yet to approve the buyout of TotalEnergies and Africa Oil Corp which in May last year announced their exit from Project Oil Kenya, forcing Tullow to assume full ownership.
“Total and Africa Oil Corp are still part of the JV (Joint Venture) despite earlier exit announcement,” Kinyua said.
The move has thrown a spanner in the works as Tullow seeks strategic investors to partner with in commercialising the oil blocks, where Indian Oil Company–ONGC Videsh Limited (OVL) has shown interest.
ONGC Videsh is reported to be seeking clarity before making an investment decision.
However, EPRA is positive on Kenya becoming a crude oil exporter, with major investments expected in the next three years before exports commence.
The government is expected to give its input on how Kenya’s crude will be handled by the investors.
This includes the planned construction of the 852 km Lokichar-Lamu pipeline for transporting crude oil from Turkana to Lamu port, for export.
“The authority is playing an advisory role that will inform its approval and progression to Final Investment Decision (FID) and ultimately full development. The plan anticipates the attainment of first oil in 2028,” EPRA led by director general Daniel Kiptoo said.
CEO Rahul Dhir has indicated that Kenya continues to remain an important asset in Tullow’s development portfolio, with the potential to add material resources and create value for shareholders.
“While we continue to progress the FDP, we are also actively working with the government of Kenya in developing options to accelerate production and cash flow to unlock value from this well-matured resource base,” Dhir said in a statement.
Tullow assets in Kenya cover blocks 10BB, 13T, and 10BA in the South Lokichar Basin and is operated by Tullow Kenya BV.
In 2020, the Early Oil Pilot Scheme (EOPS) successfully completed two years of production.
The reservoir and production data gathered during EOPS was then used in the updated Field Development Plan (FDP), which intends to produce up to 120,000 barrels of oil per day.
“The development has been designed to be robust at lower oil prices and we continue discussions with prospective strategic partners for this project,” Dhir said.