The progress and development of Project Oil Kenya is being thrown into headwinds. This is with the intention by Tullow Oil to sell the entire stake in the Lokichar oil blocks.
This is a move that could present major challenges for the country. Kenya expected to start the commercial phase of the project later this year, leading to first oil in 2022.
Reports indicate the firm, which has been steering development of the Project Oil Kenya as the operator of the blocks, could be selling its entire stake in the blocks. This may throw a major curve ball for the country’s ambition to commercially produce oil.
Project Oil Kenya -JV Partners in South Lokichar Basin
According to reports, Tullow Oil the operator of blocks Blocks 10 BA, 10 BB and 13T in the South Lokichar Basin wants to sell. The company together with its JV partner Total seeking for a partial or total equity change in their acreage sending mixed messages in the Kenyan nascent oil and gas industry.
The reports further indicate that the company was seeking to offload this equity by Q2 2020. This would throw in the wind the much anticipated final investment decision (FID) by the end of 2020.
It is understood the two partners have hired French bank Natixis to officiate the transaction of blocks. Tullow Oil, the Irish explorer having offered to sell 100 percent of its shares to a willing buyer unlike Total’s 50 percent share sale.
This is unlike the earlier expected to 20% of its 50% stake in the blocks with losses in Guyana and Ghana. Tullow has hinted that it would focus on the investment plans for each of the Group’s major assets in its second phase review having already restructured its executive management team.
The Kenyan Government has however downplayed the announcement saying it was only aware of the earlier intended farm-out and not the total exit.
“The Kenyan government is aware of Tullow’s plan, which is not expected to delay investment in production or the proposed pipeline,” Petroleum Principal Secretary Andrew Kamau
Tullow Oil & Total in East Africa
Tullow and Total continue to be major players in the East African Upstream Sector namely Uganda where they have discovered contingent resources are estimated to be around 1.7 billion barrels of oil.
In Kenya, Tullow estimates that the South Lokichar basin contains a recoverable resource range of 240 – 560 – 1,230 mmbo (1C–2C–3C).
In 2018 Tullow exited Block 12A after an unsuccessful Cheptuket well in the Kerio Valley leaving Delonex Energy as the operator.
Africa Oil is the other JV partner in the three blocks.