Tullow to resume exploration, ups Turkana reserves

UK’s Tullow Oil has raised reserves estimates in Turkana up to one billion barrels and targets to resume exploration to consolidate recoverable oil ahead of next year when Kenya plans crude exports.

The firm had heavily cut back on exploration activity within the basin on the effects of low global oil prices and instead focused on evaluating drilled wells to lower pressure on its work budget.

“The group continues to review options for re-starting the exploration campaign in this basin to de-risk the overall upside potential of one billion barrels,” Tullow said on Thursday even as it raised its recoverable oil estimates in Kenya by 25 per cent to 750 million barrels.

Tullow with its partners Africa Oil and A.P. Moller-Maersk had previously put recoverable reserves within the South Lokichar basin at 600 million barrels.

“Ongoing assessment of recently completed South Lokichar appraisal programme in Kenya indicates potential to increase recoverable resources up to 750 million barrels with further exploration potential supporting an upside of 1 billion barrels,” it said.

Kenya has expanded the area targeted for exploration on blocks 10BB and 13T following the recent discovery of oil in three fields within the Lake Turkana basin.

An update by the Petroleum Directorate said the move follows discoveries on Etuko, Ewoi and Ekunyuk prospects —making up the nine discoveries for the proposed field development plan area in the South Lokichar basin.

The British firm in March announced an additional discovery of potential oil reserves in the Cheptuket-1 well in the Kerio Valley Basin, which could mean opening up a second oil basin for development in the country where finds have been made in south Lokichar basin.

Tullow said it will focus on developing the oil wells, buoyed by higher reserve estimates and a decision by Kenya to build its own crude pipeline.

“Tullow will now work with the Government of Kenya and our partners on a range of options for the independent development of these resources including early production using existing infrastructure which would provide valuable reservoir data ahead of a full field development with an export pipeline” the explorer said.

Kenya is considering moving its crude oil to Mombasa by road and railway as part of an “early harvest” programme.

The Energy ministry has offered Rift Valley Railways a contract to move the oil over a distance of more than 800km from Eldoret to Mombasa.

Energy and Petroleum secretary Charles Keter told a parliamentary committee that the country targets to start exporting 2,000 barrels of crude oil per day by rail and road as it awaits the completion of a planned oil pipeline linking Lokichar to Lamu through Isiolo.

The pipeline is projected to cost Sh425 billion and is marked for completion by the second quarter of 2021.

READ: Kenya oil pipeline to be complete by early 2021: Energy CS

Kenya was initially scheduled to construct a joint crude pipeline with Uganda, but the deal flopped.

Although Uganda said in August 2015 it had agreed to the Kenyan route, it changed its stand and said Nairobi had to guarantee security for the pipeline, along with financing and cheaper fees.

READ: As Uganda chooses Tanzania pipeline route, Kenya to go it alone

Oil firm Total has previously raised security concerns about the Kenyan route which would run through the volatile north eastern region where militant groups such as the Al Shabaab remain a threat.

Tullow, which has interests in both Ugandan and Kenyan oil fields, said it respected a decision by the two countries to build separate pipelines.

“While we have always believed that a joint Uganda-Kenya export pipeline was the most cost-effective option, we are clear that both Uganda and Kenya’s oil resources can be developed separately,” Tullow said.

Tullow CEO Aidan Heavey said on Thursday the decision of the Kenyan and Ugandan presidents to develop stand-alone export pipelines had given the company “much greater clarity and certainty around oil production in both countries”.