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Questions as Tullow gives up lucrative oil block

By Macharia Kamau | Published Tue, February 27th 2018 at 00:00, Updated February 26th 2018 at 22:30 GMT +3

Tullow Oil plans to relinquish its status as the operator of what could be the most lucrative exploration blocks outside the Lokichar Basin to a little known UK firm.

This means that Tullow Oil, whose activities in Lokichar have been by far the most successful in the country’s exploration history, will stop playing the critical role of the day-to-day running of block 12A in Kerio Valley.

The role of undertaking seismic surveys, exploratory drilling and other activities that lead up to oil discoveries will now be handled by Delonex Energy, also headquartered in the UK.

The Petroleum and Mining Ministry said it received the application by the two firms regarding the planned change in roles last week and its officials were yet to study it.

Principal Secretary Andrew Kamau said the ministry was looking at the request and approving or turning it down would be subjected to a process.

He added that the ministry would try to understand the circumstances surrounding the ceding of Tullow’s operator status before giving approvals but did not give a timeline.

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“We have just received the letter requesting the changes today (Friday) and are yet to look into it,” said Mr Kamau.

“It is a process. We need to understand the issues that have led to this decision.”

 

Delonex Energy says it has assets in three countries in Africa and from information on its website, the Kenyan block 12A appears the only one where it has had major activities taking place, including seismic studies and drilling of an exploratory well.

Doubtful reserves

Other than Kenya, the firm has oil blocks in Ethiopia and Chad and says it is seeking to grow its footprint in East and West Africa.

Giving up its operator status in the block follows a similar move in Uganda where Tullow Oil sold a substantial stake to Total which then assumed the role of the operator in the Lake Albert project.

Tullow also plans to reduce its stake in the Lokichar Basin, but has not given an indication as to when this will happen.

The latest development comes at a time when questions have been raised on the total oil that Kenya can recover from its oil fields in Turkana County. The company in its latest report classified the amount of recoverable oil in Turkana into three categories that range from 240 million barrels (almost all of which can be recovered) to 1.23 billion barrels (which is highly speculative) with 560 million barrels being the mid-point.

The problem of the doubtful reserves is compounded by the scaling down of operations by Tullow Oil, the lead firm in the Turkana oil project.

While not much work has been done on block 12A, preliminary exploration by Tullow in 2016 showed the block had the potential to become a key oil block. After drilling the Cheptuket-1 well, the firm said it encountered oil shows as well as the presence of an active petroleum system with significant oil generation.

Following the drilling of the well, Tullow Oil then termed the find the “most significant well result to date in Kenya outside the South Lokichar basin”.

Delonex holds a 50 per cent interest in the block following successive acquisitions of stakes by other players who owned the block.

The latest acquisition, which increased its interest to 50 per cent was of a 25 per cent stake from Tullow.

Before then, it had bought a 15 per cent interest from Marathon Oil and a 10 per cent interest from Africa Oil.


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