Total and Tullow to sell stakes in Kenyan oil project amid delays

Total and Tullow Oil aim to reduce their stakes in Kenya’s first oil development with a joint sale that could see Tullow exit completely amid uncertainty over the project’s launch, banking, and industry sources said.

The two oil and gas producers have hired French bank Natixis to run the joint sale process for Blocks 10 BA, 10 BB and 13T in the South Lokichar Basin, the sources said.

London-listed Tullow, which operates the project, last year indicated it intended to sell up to 20 per cent of its 50 per cent stake in the blocks.

However, the sources said it is now willing to sell the entire stake after disappointing exploration results in Guyana and production problems in Ghana that prompted the ousting of its chief executive and wiped out nearly half of the company’s market value.

SEE ALSO :Ministry kicks off audit of Turkana oil pilot scheme

French oil major Total, meanwhile, aims to sell up to half of its 25 per cent stake in the Kenyan project, the sources said.

Tullow, Total and Natixis declined to comment.

Final decision

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The entire project is valued at between $1.25 billion to $2 billion (Sh125 billion to 200 billion), but it is hard to be precise because the development has yet to receive a final investment decision (FID), two of the sources said.

Tullow this month said it was still targeting FID by the end of 2020, with production starting in 2022, describing the timeline as “challenging”.

SEE ALSO :Crude oil pipeline to employ 7,000

The fields already produce about 2,000 barrels of oil per day as part of an early production system. The oil is trucked from Turkana to Mombasa. A first export cargo of 250,000 barrels was shipped on a tanker last August.

The project partners have also agreed with the Kenyan government to develop a crude oil pipeline from Lokichar to Lamu on Kenya’s coast.

Tullow and Toronto-listed Africa Oil, which holds a 25 per cent stake in the blocks, first discovered crude oil in the Lokichar basin in 2012.

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