Tullow shutters Kenya export business

Tullow Oil has announced the end of its Early Oil Pilot Scheme (EOPS) in Kenya, declaring the project to be a success.

The contract formally concluded on June 2 with just one cargo lifted. The pilot scheme involved five wells in the Amosing and Ngamia fields, in Blocks 13T and 10BB. Exports peaked at 2,000 barrels per day.  Trucks moved crude by road from Turkana to Mombasa.

Kenyan crude was sold for the first time ever in mid-2019. A cargo of 240,000 barrels were lifted from the port August 26, 2019. The sale raised $13.4 million in revenues. The Celsius Riga tanker transported the crude to ChemChina.

While the EOPS scheme officially ran for two years, it was cut short. Trucking was suspended in the fourth quarter of 2019 as a result of difficult weather. At the time Tullow published its final results for the year, in March, the EOPS was still suspended.

The EOPS provided data, logistical and operational experience and training, Tullow said, which will help the project move towards full-field development.

Concrete demonstration of the impact of the EOPS came in upgrade works carried out on roads and bridges.

There were also socio-economic benefits of the work. The EOPS had given local companies an opportunity to participate in oil transportation. The work involved 30 trucks, six light vehicles and a bus. Employment went to 35 truck drivers, including a number of female drivers.

Headwinds

Tullow is working on plans to sell a stake in its Kenyan assets. The company had aimed to reach a final investment decision (FID) on the project by the end of 2020 but it is clear this is now extremely unlikely.

Tullow suspended work in Kenya in May, under a force majeure declaration.

The reserves in Turkana remain viable, Tullow said. The next steps include environment and social impact assessment (ESIA) work and project definition.

While coronavirus has had an impact on operations, Tullow has also found fault with some moves by the government. In particular, amendments to the tax law, approved in late April, moved the rate of VAT from zero for oil exploration equipment to 14%.

By Ed Reed

Gh Extractives

Ghextractives.com is an independent multimedia portal that seeks to provide credible information and news content to readers especially players in the extractive sector in Ghana, Africa and beyond. It also provides a unique platform for players in the energy sector to market their products and reach a wider audience

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