Tullow expects to fully develop Turkana oil fields by 2020

A Tullow oil field in Turkana, northwest Kenya

NAIROBI: Tullow Oil has announced that the oil fields in Turkana will be fully developed by 2020, ahead of restarting of drilling in Lokichar Basin before December.

The UK gas and oil exploration company published the production update yesterday where it gave a similar timeline for the Ugandan operation in the Lake Albert basin. Both projects are being developed independently and are collectively estimated to have more than 1.7 billion barrels crude oil reserves.

Tullow’s announcement offers a much-needed reassurance after recent shocks presented by the decision by Uganda to pull out of a joint pipeline with Kenya, and opting to evacuate its oil through Tanzania. “Both projects aim for full development by 2020,” Bloomberg Intelligence analyst Will Hares reported yesterday, quoting Tullow Oil.

Kenya expects to have completed the development of the crude oil pipeline from the oil fields to Lamu Port by then, though the Energy Ministry has a more optimistic deadline of June of 2018. Mr Hare’s projects that the growing oil finds in both countries would catalyse the drilling activities and the construction of pipelines to evacuate the crude oil to the refineries, and onward export.

“While early-stage, with full development not expected until 2020 or later, accelerating drilling activity, resource delineation and project advancement will deliver a pipeline of near-term catalysts for license holders and investors,” adds the analyst in his report.

A slump in global oil prices over the last two years has slowed investments in drilling in many parts of the World, including Kenya. There is however little prospect of a significant price rise in the near future with major producers around the World failing to agree on cutting production to help prices.

In spite of the low global prices, Tullow – majority owner of the Lokichar oil fields, has announced rising profitability projections of the operation owing to the bigger confirmed reserves. Africa Oil and Maersk Oil jointly own 50 per cent of the operation in Lokichar, while Tullow owns the other half.

Africa Oil’s chief executive Keith Hill had earlier in May said that the confirmed oil reserves had grown by a quarter since the previous assessment last year. “Based on the continuing drilling and testing program over the past year our best estimate is now that the company’s discoveries in the South Lokichar Basin contain gross unrisked contingent resources of 766 million barrels of oil,” Mr Hill said.

With that update, the Lokichar operation was upgraded to what is technically known as 2C, meaning there is sufficient chance that the available reserves are much higher than the confirmed amounts.

“The level of these resources gives us confidence that we will exceed the threshold required for development and we continue to push forward for development sanction during 2017,” added Mr Hill.

Kenya, which has been forced to go it alone in the development of the crude oil pipeline after Uganda pulled out, anticipates producing the first barrel next year before scaling up production to full capacity in 2020.