Tullow plans Sh1.6bn annual spending on Kenya oil project
Tullow Oil plans to retain its annual spending on Kenya’s oil project at Sh1.6 billion ($10 million), pointing to a sustained interest in the project that has dragged on for years since the discovery was made in 2012.
The British oil explorer in the latest trading update said it plans to trim its overall capital spending across countries it has a presence in from $380 million (Sh61.95 billion) to $250 million (Sh40.76 billion) as it takes a drilling break in Ghana.
Kenya’s budget for this year is the same as that spent last year and will be equal to four percent of Tullow’s planned overall capital spending.
Tullow will in March formally issue the full-year trading results, in which it is expected to give further details on the progress of Kenya’s oil project. The project has suffered several setbacks, delaying key decisions.
TotalEnergies and Africa Oil Corp, who held a 25 percent stake each in project oil Kenya, pulled out in May last year, over what was explained as “differing internal strategic reasons,” leaving the London-listed firm alone in the oilfields.
The withdrawal of the two firms left Tullow as the sole partner in the project, a development it said created a more flexible proposition for a strategic partnership. Tullow said it was continuing with discussions with several interested parties.
There has also been a delay in getting approval on its final field development plan (FDP)—a document that outlines how Tullow intends to develop the oil fields, forecasts for production and costs, as well as how it plans to manage the impact of the project on the environment and society
Tullow had together with TotalEnergies and Africa Oil Corp, in March last year, submitted the plan for approval to the Energy Ministry and the Energy and Petroleum Regulatory Authority, before the two partners pulled out.
The plan was based on a life of field resource of 585 million barrels gross, initial plateau production of 120,000 barrels of oil per day, and capital investment of $3.4 billion (Sh554.3 billion) for the first oil.
Tullow was expecting the approval process, including ratification by Parliament, to conclude last year but this did not happen, even as its two partners pulled out.
The firm said the exit of two partners led to a re-assessment of risks associated with reaching a final investment decision, resulting in a $9 million (Sh1.47 billion) impairment.
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