Canadian oil company Africa Oil has revealed that it is yet to reach a deal with interested investors in the Turkana Oil project, even as the clock to the final investment decision ticks.
Its other partners, British oil exploration firm Tullow Oil and Total have also from the beginning of last year stepped up a search for a strategic partner to help implement a development plan for oil production in Turkana County.
A deep-pocketed strategic partner would enable Tullow and its partners to cushion risks for the multi-billion project that includes setting up a crude pipeline and processing facilities for the oilfields.
"Advanced discussions are ongoing with the interested parties. There is no guarantee that the company can successfully conclude a farm-out to new strategic partner(s) on favourable terms. The company will update the market on this process in due course," said Africa Oil in a regulatory update dated May 12.
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. Africa Oil and Total on the other hand each own a 25 percent stake.
Tullow earlier planned to sell a significant chunk of its stake in the blocks, having hit financial hurdles while Total aimed to sell up to half of its 25 percent stake.
Africa Oil in the update last week did not disclose the identities of the potential bidders but echoed its partner Tullow which earlier maintained the future of the Turkana oil project is dependent on them getting a strategic investor.
"A successful farm-out is viewed by the company as a critical step towards the FID (final investment decision) for project Oil Kenya being achieved over the course of next year," said Africa Oil.
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 said earlier.
“Failure to secure a strategic partner would impact our ability to progress the Kenya project to final investment decision and unlock value,” Tullow had said earlier in its latest annual report.
Indian Oil Corp, India's top refiner, has in recent weeks been linked to the stake acquisition talks.
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.