Economy

Tullow Oil strikes deal to resume work in Turkana

turkana

Turkana South MP James Lomenen addresses demonstrators who were demanding employment, contracts and supplies from Tullow Oil. Tullow Oil will double its social budget, train locals and open up its tenders to women and youth from areas in which they operate Photo/FILE

Summary

  • The company made the promise under a deal brokered by government officials to enable it resume operations in Turkana County Friday morning.
  • The British firm committed in an MoU signed with Turkana leaders to immediately double its social investments to Sh340 million annually and offer more training scholarships to enable locals take up high cadre jobs.
  • Tullow indefinitely suspended its operations in Southern and Central Turkana on October 26 after community leaders organised residents to protest alleged discrimination against locals in employment and award of tenders.

British petroleum company Tullow Oil will double its social budget, train locals and open up its tenders to women and youth from areas in which they operate, it was announced Thursday.

The company made the promise under a deal brokered by government officials to enable it resume operations in Turkana County Friday morning.

The British firm committed in an MoU signed with Turkana leaders to immediately double its social investments to Sh340 million annually and offer more training scholarships to enable locals take up high cadre jobs.

In exchange, the government will beef up security to protect the firm in an area that is infested by small firearms.

“This is a working formula and a way forward to ensure that the community does not disrupt Tullow’s operations again in future,” said Energy and Petroleum secretary Davis Chirchir.

“The increased social budget should be added to what is available from the Equalisation Fund to boost the capacity of Turkana people to benefit from oil exploration.”

Tullow indefinitely suspended its operations in Southern and Central Turkana on October 26 after community leaders organised residents to protest alleged discrimination against locals in employment and award of tenders.

READ: Tullow Oil’s woes grow as MPs call for suspension

In the MoU signed with Turkana Members of Parliament Thursday, Tullow management pledged to regularly share information about tenders and employment opportunities with local communities.

A big chunk of the firm’s tenders will also be reserved for the locals, Tullow officials said. “We now have a better understanding of issues than before and I am reasonably sure that matters will henceforth be resolved peacefully,” Tullow’s deputy general manager Sid Black said.

The London Stock Exchange -listed multinational discovered oil in Turkana in its first attempt at exploratory drilling in Kenya last year, ending more than two decades of barren search.

The discovery was in line its own record of exploration success following similar finds in Ghana, Uganda and French Guiana. Tullow has since reported other finds, the fourth only a month ago at Ekales-1 wildcat estimated to have a net oil pay reserve of between 60 and 100 metres.

The success at the Ekales-1 wildcat raised five-fold the estimated oil deposit in the Lokichar basin to 368 million barrels of oil. The discoveries buoyed the multinational to significantly raise its pace of exploration in Kenya, setting itself an ambitious target of 12 wells over the next 12 months before the protests disrupted its operations. 

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To the community, however, the heightened exploration has raised expectations with counties demanding a role in the management of oil resources in spite of a constitutional provision that puts it in the hands of national government.

“Four rigs were running by the time of protest, and beside the direct losses suffered so far in the grounded operations, it will take us up to two weeks to get to where we were in October,” said Mr Black.

“I don’t want to disclose the amount of financial losses we have due to suspension of our work, but I can assure the figure is quite substantial.”

Generally, an oil explorer is allowed to recover all the costs incurred during the operation. Under the MoU signed Thursday, however, Tullow will have to absorb all the losses after it took responsibility for creating conditions under which the losses were made.

The firm says 58 per cent of the slightly over 2,000 workers in its payroll were hired from the surrounding communities. The local leaders have accused Tullow of confining locals to low-paying manual jobs and locking them out of tenders.

The last month’s protests begun after community members disagreed with the company management over the award of tenders to supply transport services.

Turkana South MP James Lomenen said the company had invited tenders for 2,000 transport vehicles, but later changed its mind and hired vehicles from outside the county despite locals having borrowed loans to buy the vehicles.

“We welcome investors but Tullow must be sensitive to our culture, needs and learn to disclose full information about its operations,” said Mr Lomenen. “We have signed several MoUs with them (Tullow officials) in the past with regard to distribution of jobs and tenders but these are ignored immediately the stalemate at hand is resolved.”

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