Tullow won’t be drawn on Kenya plan to start oil export next year

What you need to know:

Tullow said it had only committed to have a blueprint on the infrastructure needed to export oil but distanced itself from recent reports that Kenya could begin exploiting oil by 2017.
Kenya’s hopes of joining the league of oil exporters has been diminishing as the price of the commodity on the international market fell.
Oil is currently trading at around $30 (Sh3,000) a barrel which is at a 12-year low.

Turkana explorer Tullow Oil is non-committal on whether Kenya will export oil as early as next year despite recent widely circulated reports suggesting plans are at an advanced stage.

In a trading and operational update Tullow said it had only committed to have a blueprint on the infrastructure needed to export oil but distanced itself from recent reports that Kenya could begin exploiting oil by 2017.

The UK explorer said it had submitted a draft Field Development Plan to the ministry of energy which will guide the Kenyan and Ugandan governments on how best to extract the commodity.

“Tullow’s trading statement refers to the East Africa project (Kenya/Uganda) which involves a regional export pipeline as agreed by both the Kenya and Uganda presidents in August 2015. With regard to any other production schemes that you may have read about, we refer you to the Ministry of Energy,” the firm told Business Daily.

Some of the reports have been attributed to Energy minister Charles Keter.

Kenya’s hopes of joining the league of oil exporters has been diminishing as the price of the commodity on the international market fell. Oil is currently trading at around $30 (Sh3,000) a barrel which is at a 12-year low.

READ: Cheap crude dims Kenya oil exploration outlook

A number of oil explorers have already said they plan to scale down operations locally while others have exited the market.

UK’s Tower Resources, Afren Oil, Australia’s Pancontinental Oil and Marathon Oil of the US have all exited Kenya due to the poor environment that makes it difficult to raise funds for exploration.

Tullow on its part said that for the 2016 financial year it will continue with its drilling programme.

The firm is drilling a well in Kerio Valley and expects to complete the work in February.

“Cheptuket-1 will likely complete drilling in February after which the PR Marriott Rig-46 will demobilise, marking the end of the current drilling campaign.”

Companies such as Atlas Development which supports oil explorers have had to wind down as their major clients scale down operations. Tullow is reported to owe the London and Nairobi listed firm millions.

The low prices are however expected to offer a respite to consumers, manufacturers, transporters and reduce Kenya’s import bill.

“During the quarter under review, the transport sector grew by 8.7 per cent compared to 7.8 per cent growth recorded in the same quarter of 2014. The accelerated growth was attributed to increased demand for freight transport and a fall in oil prices,” said the Kenya National Bureau of Statistics when releasing the third quarter results.