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November 20, 2018

Tullow ends Turkana standoff, oil transportation to continue

President Uhuru Kenyatta and Deputy President William Ruto are conducted on a guided tour of the Oil Production Facility during the Inauguration of the Ngamia 8 Early Oil Pilot Scheme , Turkana County.Photo PSCU
President Uhuru Kenyatta and Deputy President William Ruto are conducted on a guided tour of the Oil Production Facility during the Inauguration of the Ngamia 8 Early Oil Pilot Scheme , Turkana County.Photo PSCU

Tullow oil is expected to resume tracking of oil under the Early Oil Pilot Scheme starting next week after the government reached an agreement with the oil firm and the host community.

On July 26, the British oil firm suspended operations in activities in Turkana due to security issues. This is after protestors demanding more security in the area blocked tracks transporting crude oil to Lamu.

President Uhuru Kenyatta launched the EOPS in June where 600 barrels of oil were transported to Lamu holding plant in readiness for export.

The trucking scheme aims to transport about 2,000 barrels per day to the coast to test oil flow rates and other technical issues before the start of full production and exports via a pipeline to be built by 2022.

According to Petroleum and Mining CS John Munyes, tracking of oil will resume on August 22 following an agreement between Turkana leaders, government and Tullow Kenya.

He said that a two tier crisis resolution framework between host community and contractor has been formed to address emerging issues and concerns. The two are the Turkana Grievances Management Committee and Inter Ministerial (escalation and support) Committee.

‘’For the first time, we have a legal structure through which host community, local leaders, contractor, national and county governments will use to dialogue and amicably resolve issues,’’ said Munyes.

He termed the suspension of oil operations in Turkana as regrettable, indicating that the country has lost Sh400 million in the past two weeks. All operation costs incurred by the company are billed to the government.

In June, the government selected Swale House Partners to undertake the audit spanning six years between 2010 and 2016.

The audit is expected to inform the ministry as to how much Tullow Oil will recover from the sale of crude oil once commercial production starts at around 2021.

In June, Tullow Oil said it has so far spent $2 billion (Sh200 billion) in exploration and appraisal activities in Lokichar, which is likely to go up as the firm gears to start commercial production by 2022.

Kenya is expected to make at least Sh6.4 trillion from Turkana Oil before it is depleted in 2043 if commercial production starts as scheduled.

Tullow Oil Kenya managing director Martin Mbogo thanked Kenyan government for dealing with security matters in Turkana urgently and confirmed that employees are back on ground to proceed with operations.

"We have received great support from the government. We look forward to proceed with tracking in next 10 days. Locals are accessing resources from the project. So far so good," Mbogo said. He added that there is good progress on the Pipeline whose construction is expected to commence in January next year.

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