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Tullow Oil cuts Kenya expenditure to Sh3bn


A worker from Tullow checks the seals on a truck before offloading of crude oil from Lokichar. FILE PHOTO | NMG

The amounts spent by British oil exploration company Tullow on local contractors in the South Lokichar oil fields, Turkana, dropped to Sh3 billion last year, fresh data shows.

Tullow spent Sh3.087 billion on suppliers compared to Sh3.745 billion a year earlier according to its annual report.

The UK multinational attributes the 17.57 percent drop to “reduced drilling activities”.

“In 2018, 37 per cent of Tullow’s overall supplier spend was with Kenyan businesses, up from 29 percent in 2017, but with a lower absolute value due to reduced expenditure following the end of the drilling campaign in 2017 and the lull in activities ahead of the start of the Early Oil Pilot trucking activities,” says the firm in the report.

In 2016, Tullow spent Sh2.83 billion, 2015 Sh7.59 billion and 2014 Sh8.25 billion.

Locals have been clamouring for more participation in the firm’s contracts leading to sporadic conflicts with Tullow management.

Efforts to reach Tullow Oil did not bear fruit as Martin Mbogo, the Tullow Kenya managing director, did not respond to our calls or queries left on his phone.

Tullow however said in the annual report it is building capacity for local suppliers to enable them compete with their international peers.

“As the Kenya project is in the development phase we have continued to focus on capacity building in local companies,” says the firm.

“A total of 300 contractor personnel have received training, including in defensive driving and transportation of dangerous goods by road as part of the Early Oil Pilot Scheme.”

Tullow was expected to resume small-scale crude oil production in the oil fields in Turkana this month under the Early Oil Pilot Scheme after obtaining long-awaited regulatory approvals from the State.

It is eyeing to ship out Kenya’s maiden oil export by the end of this year.

A proposed law before Parliament, the Local Content Bill 2018, introduced by Baringo Senator Gideon Moi, seeks to promote the "maximisation of value-addition and the creation of employment opportunities in the extractive industry value chain through the use of local expertise, goods, services, businesses and financing and its retention in the country.