× Digital News Videos Health & Science Opinion Education Columnists Cartoons Lifestyle Moi Cabinets Arts & Culture Ramadhan Special Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
×

Tullow writes off Sh47b Kenya outlay

BUSINESS
By Macharia Kamau | March 31st 2021
Crude oil consignment from Lokichar, Turkana at Mombasa's Changamwe KPRL storage facility. [Maarufu Mohamed, Standard]

Kenya’s dream of being an oil exporter appears to be slipping away after Tullow Oil wrote off billions of shillings it has spent in exploring for oil in Lokichar, Turkana County.

The company, in its annual report for the year to December 2020, said it has written off $430 million (Sh46.8 billion) in exploration costs, attributing it to low global oil prices.

Oil prices tanked at the beginning of last year to an average of $17 (Sh1,853) per barrel in April, making investors edgy about putting money in the industry.

The amount of money exploration companies recoup from their investment hinges on the price of oil in the international market, meaning currently, they are likely to take longer to recover their money.

The write-offs are in addition to a significant reduction in the activities Tullow is undertaking in the country.

The British firm has also cited major delays in the Kenya project among the key risks to its operations in the coming year.

Kenya accounted for nearly half of the exploration write-offs, which totalled $987 million (Sh106 billion).

In Uganda, the firm wrote off $451 million (Sh49 billion) last year, with the two East African countries accounting for 90 per cent of the exploration costs write-off.

Take a quick survey and help us improve our website!

Take a survey

“The total exploration cost write-offs for the year ended December 31, 2020 were $987 million (Sh106 billion), predominantly driven by a write-down of the value of Kenya due to a reduction in the group’s long-term accounting nominal oil price assumption from $65 (Sh7,085) per barrel to $60 (Sh6,540) per barrel and Uganda was written down to the fair value of the consideration as part of the disposal,” said Tullow in its report.

It is the second year in a row that Tullow has made a major write-off on its exploration costs in Kenya, having written off $419 million (Sh45.7 billion) in 2019.

This has seen the firm’s remaining recoverable amount drop to  $247 million (Sh26.9 billion).

The company also expressed concern about delays in the Kenyan project.

“Key execution risks… include (being) unable to progress the preparation of Field Development Plan (FDP) in Kenya and therefore any exercise to unlock Kenyan potential,” said Tullow. 

 

Share this story
Wanted terror suspect: Do you know this man?
According to security agencies, Rashid, a trained pilot is currently in Somalia and may be planning an attack on Kenya.
Family Bank profit jumps to Sh1b
Family Bank has reported a net profit of Sh1.16 billion in the year ended December 31, 2020, up from Sh949 million in 2019.
.
RECOMMENDED NEWS

Feedback