Tullow raises stakes for Kenya’s oil dream
Kenya’s prospects of striking it rich from its oil deposits could be back on track following an affirmed take of its oil deposits by explorer Tullow Oil.
During the release of its half year results and its six months operational update, Tullow disclosed greater stakes for the project following the completion of a redesign of the development project.
The review affirms the projects represented by Blocks 10BB and 13T Licenses to be technically, commercially and environmentally robust.
For instance, Tullow now projects a greater daily production rate of 120,000 barrels (bbls) upon the project’s commercial maturity down from an estimated 72,000 barrels a day.
At the same time, the review estimated larger volumes of oil deposits at a gross of 585 million barrels down from 433 barrels in the last review.
Key changes in the projects development concept cover factors including the new production data tapped through the recent early oil pilot scheme (EOPS) where 450,000 barrels of oil were produced from the Amosing and Ngamia fields which cover more than half of the project’s resource distribution.
Tullow has further optimized the number of wells to be drilled before the attainment of first oil while the explorer has added the Ekales field to the first phase of production.
Tullow Oil now estimates capital expenditure covering upstream and the pipeline to first oil at Ksh.374 billion ($3.4 billion) down from Ksh.319 billion ($2.9 billion) after factoring in a bigger facility processing capacity, additional wells and a bigger pipeline diameter (20 inches).
Nevertheless, the larger project design will yield in higher output while cutting overall project costs.
For instance it will take about Ksh.2,420 ($22) to produce a barrel of oil in contrast to an earlier projection of Ksh.3,410 ($31).
“Tullow and its JV Partners have worked closely together over the past year to re-shape the Kenya Development. Through this work, we have made the project financially viable at lower oil prices and adjusted our plans to improve the environmental and social impact of the development. I look forward to working with local communities, national and local governments and our partners on this much improved project,” said Tullow Kenya Managing Director Madhan Srinivasan.
“Our Kenya asset is an important part of our portfolio and growth plans and we are actively looking at bringing a strategic partner into the development who will work with us and our JV partners to move this project of national importance forward,” added Tullow Oil Plc Chief Executive Officer Rahul Dhir.
Subsequently, Tullow and its joint venture partners have submitted a draft final development plan (FDP) to the Ministry of Energy and Petroleum for review.
The explorer is set to integrate views from the Ministry into a final FDP expected before the close of 2021.
The FDP is expected to guide the issuance of a final investment decision (FDI) which if pronounced would finally see Kenya reap billions from its oil deposits.
“Based on the revised plan, Tullow believes that this project is an attractive commercial prospect for investors looking to access the East Africa oil and gas sector in both the upstream and midstream. It is intended that a strategic partner will be secured ahead of a Final Investment Decision,” Tullow said in their half year trading statement on Wednesday.