State extends Tullow's licence

President Uhuru Kenyatta flanked by Deputy President William Ruto flags off the crude oil trucks during the Inauguration of the Ngamia 8 Early Oil Pilot Scheme, Turkana County. [File, Standard]

Tullow Oil has received an extension to its exploration licences on the blocks it has been working on in Turkana County.

This was after meeting the requirements set by the government earlier this year.

The firm yesterday said it had been granted a 12-month extension on the exploration licences for blocks 10BB and 13T following submission to the Ministry of Petroleum of a work plan and budget for 2021.

The deadline for submission was this month and the licence will last a year.

Tullow observed that it would now embark on redesigning the Kenyan oil project to make economic sense against the background of low oil prices.

“The licence extension will allow the joint venture partners to reassess project oil Kenya and design an economic project at low oil prices whilst preserving the phased development concept,” Tullow said in a statement yesterday.

In developing a new roadmap that will deliver Kenya’s dream of being an oil producer, Tullow will factor in the possibility of oil prices remaining low for long.

It will work with a breakeven price of $45 (Sh4,900) or less per barrel against previous expectations of $50 (Sh5,500).

The firm will in 2021 embark on moving the project forward, including getting access to land and water.

Provision to land and water rights - critical for the project - largely hinge on the government and have moved at a slow pace.

The project will require huge amounts of water for oil production. While the firm has identified Turkwel Gorge as an ideal source of water, it still needs county and state approvals.

It also needs the National Land Commission to acquire and deliver land for the development of oil fields and the pipeline to Lamu.

The commission has started acquiring the land. “Over the coming months, the joint venture partners will work closely with Kenya on land and water agreements. The successful completion of this work will enable the submission of Field Development Plans to the government,” Tullow said yesterday.