I have several times expressed doubt that Tullow Oil will ever develop Turkana crude deposits.
The company is no longer the global oil player it used to be, with its current production participation having reduced to a mere 70,000 barrel per day in West Africa—much less than the 120,000 barrels per day that we expect to produce from Turkana oilfields.
Tullow is unlikely to have the financial and technical clout to attract a significant strategic partner to develop Turkana oil.
Discussions of field development plan between Tullow and the energy authorities have taken nearly four years with no indications of a credible, well-resourced strategic partner emerging. And time is running out for Kenya which is badly in need of turning the oil into real-time gross domestic product, foreign direct investment inflows, jobs and revenues for local communities.
The Energy ministry needs to realistically rethink its options with Tullow Oil.
Oil producing and consuming countries have been re-evaluating their energy strategies post-Ukrainian supply chain disruptions, with new emphasis on energy security and affordability to assure economic stability. And this includes assured long-term availability of oil and gas.
As a result, global capital is now readily lending to profitable new oil and gas projects with assured cashflows and within the realms of the ongoing energy transition.
To attract credible investors, the ministry needs to re-evaluate how Turkana oil is commercialised. I believe the same reasons that made Uganda, and its oil investors reject the Lamu export pipeline route in preference to Tanzanian transit still exist, the main one being insecurity along the corridor.
Further, investors and financiers are preferring short lead-time offshore projects to long lead-time onshore pipeline export projects, not well aligned to shrinking global oil demands. This is a fact which is not in favour of Turkana oil pipeline exports.
I have previously advocated the option of a simple technology refinery, preferably at Eldoret, fed by a crude oil pipeline from Lokichar.
A local refinery will immediately replace imported fuels and improve balance of payments. An Eldoret location will permit pumping fuel products to Nairobi by reverse flow through Kenya Pipeline Compnay facilities, while trucking exports across the border to Uganda and Great Lake markets.
An Eldoret location will also permit distribution of non-pipeline products like cooking gas and fuel oil.
Further, a refinery provides opportunities for diversification to petrochemicals, which have become an escape option for oil companies in readiness for shrinking transport fuels demands. Petrochemicals have many value-addition opportunities like plastics, fertilisers, alcohols and textiles among others.
