Tullow ties Turkana oil prospects to stake sale


Tullow Oil plc CEO Rahul Dhir. PHOTO | DENNIS ONSONGO | NMG

The future of Kenya’s Turkana oil project is dependent on the British oil explorer Tullow and its partners getting a strategic investor, the firm has disclosed.

Failure to secure a strategic investor would deal a blow to Kenya’s hopes of petro-dollars needed to fuel economic growth as the project would face an uncertain future, the London listed Tullow now says.

“Failure to secure a strategic partner would impact our ability to progress the Kenya project to final investment decision and unlock value,” says Tullow in its latest annual report.

Tullow owns a 50 percent operated interest in blocks 10BB and 13T in South Lokichar basin, Turkana County, where the company discovered about one billion barrels of crude in 2012.

Toronto-listed Africa Oil Corporation and French oil major Total each own a 25 percent stake. Tullow earlier planned to sell a significant chunk of its 50 percent stake in the blocks, having hit financial hurdles of its own while Total aimed to sell up to half of its 25 percent stake.

Tullow now says “discussions are underway with potential bidders around a range of commercial arrangements.”

Tullow did not disclose the identities of the potential bidders.

“The Kenya JV Partners via an ongoing farm-down process are actively seeking a strategic partner to fund the next stage of development and unlock value,” it said.

A deep-pocketed strategic partner would enable Tullow to cushion its risks for the multi-billion project that includes setting up a crude pipeline and processing facilities for the oilfields.

Indian Oil Corp, India's top refiner, has in recent weeks been linked to talks of possible acquisition of stake. It has not confirmed or denied the reports.

Kenya had set a December 2021 deadline for Tullow to present a comprehensive investment plan for oil production in Turkana or risk losing concession on two exploration fields.

This would pave the way for the planned development of a pipeline and oil processing facility in the basin that includes $3.4 billion (Sh373.6 billion) investment for upstream activities.

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