Tullow still pursuing strategic partner, says oil plan on course
Business
By
Macharia Kamau
| Sep 18, 2024
Tullow Oil is yet to make much headway in its search for a strategic partner, which remains one of the key aspects needed to move Kenya's oil project forward.
This is even as the firm said it is committed to seeing the project through to its commercial phase, which would see Kenya start production and export of oil from Lokichar in Turkana county. The project has faced major delays and is now expected to start oil production in 2028.
Tullow Kenya BV Managing Director Madhan Srinivasan said Wednesday the key milestone to advancing and unlocking the project's value rests on finding a strategic partner.
While he noted that the firm had a robust financial position, he said a strategic partner is necessary "to apportion the capital exposure and risk due to the scale of the project investment." Once a strategic partnership is secured, he said, the next challenge is to secure project financing.
"Tullow has a robust financial position and has generated over $1 billion (Sh130 billion) of free cash flow between 2020-23, with a further $200-300 million (Sh26-39 billion) expected in 2024," said Srinivasan when the team from Tullow appeared before the Senate's Energy Committee.
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The firm has since 2021 been looking for a strategic partner that is expected to steer the project to the commercial phase, including injection of capital and possibly taking over the day-to-day turning of the project from Tullow.
Last year, it was reported to be engaging Indian firms, but the talks appear to have collapsed.
Other than finding a strategic partner, other factors that have caused delays include the approval process for Tullow's Field Development Plan (FDP). The plan, which outlines how Tullow will go about developing the oil fields in Lokichar, has been under review by the government since 2021 and has on several occasions been returned to Tullow for updates.
The Energy and Petroleum Regulatory Authority in June this year declined to approve it and instead referred it back to Tullow, citing some gaps, which Tullow now says it is addressing.