Nema denies Tullow crucial nod pushing oil plan to 2023

Tullow crude oil. [File, Standard]
A State agency has declined to issue an environmental impact assessment licence to Tullow Oil for its operations in the Turkana oil fields.

In what now casts doubt over the commercial phase of Kenya’s oil plan, the National Environment Management Authority (Nema) said the British firm had failed to comprehensively consult the host community.

This means Tullow will have to go back to the area residents and undertake further talks to clear the latest hurdle to stalk its operations in the volatile region.

Tullow Oil said yesterday the joint venture partners and the Government were also unlikely to beat the 2019 deadline to make critical decisions on investing in the project owing to delay in processes such as land acquisition.

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The twin challenges have forced the firm to push the earlier projected date for the first oil export from 2022 to 2023.

The UK oil production firm said in disclosures to shareholders that Nema had directed it to undertake further consultation with the host community before it can be issued with the Environmental and Social Impact Assessments (ESIA) licence.

Such impact assessments establish how a community and even the environment would be affected by a project and recommend measures to cushion them from adverse effects.

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“The National Environment Management Agency has requested that additional community consultation take place for the ESIAs, which will now be submitted in the second half of 2019, which is later than anticipated,” said Tullow in a statement yesterday.

The company, which is the operator of the Lokichar oil fields that it co-owns with Total and Africa Oil, has endured several delays in its push to move into the commercial production phase.

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It had expected to start production of oil by 2022, which was pegged on getting investment commitments from each partner this year.

The process referred to as the Final Investment Decision (FID) has, however, been pushed to next year, with the firm saying it can only achieve the first oil three years after FID.

“The Government of Kenya continues to make good progress, both in acquiring the land for the upstream and pipeline and securing water rights for the upstream. While these activities are progressing well, they are taking longer than originally forecast,” said Tullow.

To reach FID, such things as the ESIA and other permits need to have been issued as well as some contracts signed.

The joint venture partners and the Government also need to agree on the ownership structure of the oil fields and the pipeline, with the Government planning to have a stake in both.  

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Developing the oil fields has been projected to cost Sh300 billion, of which Sh100 billion will be used in building the pipeline.

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