British Oil explorer –Tullow’s lack of strategic partner might jeopardize Kenya’s oil dream
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By Gerro Biko GAROWE ONLINE
- Posted On 17-09-2022, 02:25PM
NAIROBI, Kenya - The lack of a strategic partner by the British explorer, Tullow Oil will end the dream of Kenya joining other oil-producing countries in Africa.
Tullow Oil recently announced a merger with Capricorn Energy to create a leading African energy company, it is still working towards the goal in its fiscal note for the first six months of 2022.
Despite the company expressing optimism about making progress by the end of the year, the firm has hinted at doubts about the realization of the project’s value in use (VIU).
Earlier this year, Tullow said its assets in Kenya risk depreciating further by close to Sh 30 billion if the government fails to hand its production license on time.
Tullow statement “These items require satisfactory resolution before the Group can take a final investment decision. Due to the binary nature of these uncertainties, the Group was unable to either adjust the cash flows or discount rates appropriately.”
Since the start of the year, the firm says it has been in discussions with the government on the approval of its Final Development Plan (FDP) and securing government deliverables.
The FDP is currently under review with the government of Kenya extending the review period to November 6, 2022.
“In addition, the company continues to progress with the farm down the process with approvals being sought,” Tullow statement reads.
The firm is however hopeful of progress on the Kenya oil project under the new administration despite the non-change in uncertainties in the last six months.
Tullow statement “A process to secure a strategic partner for the development project in Kenya is ongoing and we are confident that substantial progress will be made before the end of the year.''
It said it is going to work with the new government to progress the project which has the potential to make a significant contribution to the Kenyan economy through taxation, revenue sharing, employment, and local content.
The oil firm estimates that Kenya's onshore fields in Turkana hold 560 million barrels of oil and are expected to produce up to 100,000 barrels per day from this year for a maximum of 23 years.
It is anticipated to earn close to Sh280 billion every year from the project which translates to Sh6.4 trillion at the end of its lifespan.
On previous occasions, Tullow Oil has defended and stood firm on the viability of the project amidst the stay of uncertainties.
GAROWE ONLINE
