Fresh audit to seal fate of Kenyas oil dream

Oil explorer Tullow Oil will deploy the next six months to undertake a fresh audit of Kenyan oil prospects, with result from the new survey underpinning the future of the project.

In a trading and operational update last week ahead of the release of its half year results in September, the Anglo-English based explorer said it is now in the process of reviewing potential output volumes.

“The Kenya project has been through a full redesign using data from the 2018-2020 Early Oil Pilot Scheme (EOPS) being fed into the model which is providing better understanding of both the resource and the optimum development plan,” noted Tullow.

“The technical work is complete, and the resource volumes are being audited by Gaffney Cline Associates (GCA) ahead of detailed project plan discussions with the Government of Kenya over the coming months. Tullow and its Joint Venture Partners expect to provide a project update to the market in the second half of 2021.”

According to the coordinator at the Kenya Civil Society Platform on Oil and Gas (KCSPOG) Charles Wanguhu, the fresh audit represents cross roads from project oil Kenya with results from the analysis likely defining a final commercial development decision for the Turkana based oil fields.

“Once this audit is done we should expect to hear Tullow’s course of action for the fields. It is also good to note that changes in these volumes could affect the Final Investment Decision (FID) and midstream project,” he said.

In September last year, Tullow made a 360 degrees turn on a potential exit by freezing a planned sales of its oil blocks to instead announce a comprehensive review of the project.

Tullows exploration license runs to the end of December this year, with the end likely to accompany the much awaited FID.

The size of the Kenyan oil blocks has previously been estimated at 500 million barrels which would equate to an equivalent 79.5 billion litres.

With the price of crude oil rebounding following the widespread re-opening of economies around the world, Kenya’s oil deposits would today be valued at around Ksh.3.8 trillion.

This return would surpass planned spending by government across the new 2021/22 budget which is estimated at Ksh.3.6 trillion.

Tullow Oil is expected to disclose further operational updates when it issues its 2021 half year results in mid-September.