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Tullow set to sell 10 per cent stake in lucrative oil block amid row

BUSINESS
By Macharia Kamau | Aug 6th 2018 | 2 min read
By Macharia Kamau | August 6th 2018
BUSINESS
Tullow Oil employees inspect the first crude oil consignment from Lokichar, Turkana County upon its arrival at the Kenya Petroleum Refineries storage facility at Changamwe in Mombasa County earlier this month. Turkana residents have blocked more consignments from leaving the county. [Maarufu Mohamed, Standard]

Tullow Oil has been given the go-ahead to sell a 10 per cent stake in an oil block in Elgeyo Marakwet.

The buyer, Delonex Energy headquartered in the UK, will now increase its stake in Block 12A to 60 per cent following several acquisitions while Tullow’s share will come down to 40 per cent.

The move comes hot on the heels of another deal earlier this year that saw Tullow cede the operator status to Delonex, meaning it would no longer play a role in the day-to-day exploration activities on the block.

“CAK (The Competition Authority of Kenya) excludes the proposed acquisition by Delonex Kenya (One) Limited of an additional 10 per cent participating interest in Block 12A located in Elgeyo Marakwet and Baringo counties, Kenya, from Tullow Kenya B V from Part IV of the (Competition) Act due to the following reasons - the merger will not affect competition negatively; and  the parties operate in the excluded sector and therefore, the proposed transaction meets the threshold for exclusion as provided in the Merger Threshold Guidelines,” said CAK in a Kenya Gazette notice.

The development also comes in the wake of an announcement by Tullow that it had stopped work at its Kenyan oilfield in Turkana County and halted trucking operations due to security issues.

Protests and security problems have halted the pilot scheme which currently trucks around 600 barrels of oil per day to Mombasa before a pipeline is built, which should be operational by 2022.

Delonex Energy has increased its stake to 60 per cent over the past three years after successive acquisitions of stakes from other players that owned the block.

It acquired a 25 per cent stake from Tullow in 2015 and before that a 15 per cent interest from Marathon Oil and a 10 per cent interest from Africa Oil.

Preliminary exploration by Tullow in 2016 showed the block had the potential to become a key oil block.

After drilling the Cheptuket-1 well, the firm said it encountered oil shows as well as the presence of an active petroleum system with significant oil generation.

Following the drilling of the well, Tullow Oil then termed the find the “most significant well result to date in Kenya outside the South Lokichar basin”.

 

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