Tullow says Turkana oil project facing delays

Trucks of the first crude oil consignment from Lokichar,Turkana, arrive at the Mombasa's Changamwe KPRL storage facility in Mombasa County on Thursday,07th June,2018 afternoon. [Maarufu Mohamed,Standard]
NAIROBI, KENYA: Kenya may not be an oil exporter by 2022 as Tullow cites delays by the Government to make key decisions to enable the project to move forward.

The firm had expected that its joint investment partners and the Government would be able to make the Final Investment Decision (FID) by the end this year but this is likely to spill to 2020.

Tullow Oil has also pushed forward the date for the export of the first cargo of oil produced under the pilot scheme to September, from the earlier planned date of June 2019.

In a statement yesterday, the British oil explorer yesterday said reaching an FID for the Kenyan project by end of 2019 was an ambitious target. The company has in the past said it expected all the partners as well as Government to commit resources for the commercial production phase – what is termed as the Final Investment Decision (FID) – by end of this year but this might now come next year.

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The decision, whereby the joint venture partners commit money as well as other resources to a project is critical for the commencement of work such as the development of fields as well as the construction of the pipeline between Turkana and Lamu. While Tullow said it is still optimistic about having an FID for the Lokichar project in the course of 2019, it noted that the Government needed to fast track some of the processes.

Delay in getting the FID could delay oil production, which is currently expected to start in 2022.

“Tullow continues to target a Final Investment Decision (FID) in Kenya by year-end although this remains an ambitious target… Discussions with the Government regarding key commercial agreements are making steady progress. A late 2019 FID remains contingent on these key Government of Kenya deliverables,” said Tullow in a statement yesterday.

The firm has also pushed forward the date by which it expects to export Kenya’s first cargo of crude produced under the Early Oil Pilot Scheme (EOPS). The company had been eyeing to export the first cargo of crude produced under the pilot in June this year but in the statement yesterday said this could only happen in the third quarter of this year. A cargo of about 400 000 barrels is expected to be shipped out in the first cargo.

“EOPS continues to truck 600 barrels of oil per day to Mombasa where 80,000 barrels of oil are being stored ahead of export. Following receipt of Regulatory Authority approval, which is expected shortly, production will be increased to 2,000 barrels of oil per day, with the first export cargo expected in the third quarter of 2019,” said the company.

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TullowTurkana CountyEarly Oil Pilot Scheme