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Longer wait for oil cash as Tullow revises output plan


Economy

Longer wait for oil cash as Tullow revises output plan


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Tullow Oil tanks at its Turkana field in February 2020. FILE PHOTO | NMG

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Summary

  • British explorer Tullow Oil and its partner Africa Oil Corp will submit an updated plan for Kenya’s crude oil production later this year, extending the wait for the yields from the resources.
  • Tullow last year received an extension to its exploration licences in Kenya to the end of 2021 in the wake of a three-months freeze attributed to disruptions from Covid -19.

British explorer Tullow Oil and its partner Africa Oil Corp will submit an updated plan for Kenya’s crude oil production later this year, extending the wait for the yields from the resources.

Tullow last year received an extension to its exploration licences in Kenya to the end of 2021 in the wake of a three-months freeze attributed to disruptions from Covid -19.

“Tullow and its Joint Venture Partners are now re-working the development project to ensure that it is robust at low oil prices and expect to submit a revised plan to the Government of Kenya later this year,” the firm wrote.

Kenya agreed to extend Tullow Oil’s licences after intense negotiations during the three-month freeze on operations from May to August 2020.

The licence deal saw the explorer lift the Force Majeure on the Turkana oil project while the government agree to exempt the supplies brought in by Tullow Oil from value added tax (VAT)

The National Treasury had removed the VAT exemption on taxable supplies, imported or purchased for direct and exclusive use in geothermal, oil or mining prospecting or exploration in April, prompting protest from Tullow.

The announcement that new production plans will be released later in the year now signals a longer wait for the petrodollars with the plans coming more than nine years since Kenya announced it had discovered commercially viable volumes of crude oil in Turkana.

Tullow Oil has also given mixed signals over their stay on the project after it began a search for a buyer of its stake in the project and pushed for concessions from the government analysts, seen as part of sweetening the deal for a potential buyer.

A new buyer for its stake will also need time to settle into the project and take it to conclusion, a scenario that may even add more time and push the dream of oil riches further away.

Other make-or-break steps for the project will include the conclusion of the land question as well as the access to water which the West Pokot county government had outlined tough conditions before allowing for the access to the Turkwel dam or river (the only viable source of water for the project).



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