Tullow reviewing its Kenya plans as stake sale falls through

(Bloomberg) --Tullow Oil is undertaking a six-month review of the viability of its operations in Kenya after a planned sale of its stake in the project fell through.

It aims to submit a “technically and commercially sound” field development plan to the government of Kenya by the end of 2021. That’s after the farm down process “did not result in any viable offers,” according to Madhan Srinivasan, Tullow’s managing director for Kenya.

The project’s joint-venture partners are reviewing “the development concept to ensure that the Kenya project is robust at low oil prices,” Srinivasan said in emailed response to questions.

Tullow owns a 50% operated interest in blocks 10BB and 13T in South Lokichar basin, Turkana County, where the company discovered about 1 billion barrels of crude in 2012. Africa Oil Corporation and Total each own 25% in the Kenyan oil project. Tullow had planned to farm down its stake in the project to around 30% in the first half of this year.

The oil discoveries in northern Kenya haven’t yet been brought to the market. A plan for small-scale crude exports via road trucking dubbed early-oil was suspended in the fourth quarter of last year after severe weather damaged roads. Tullow later announced the program had come to an end.

Covid-19 also dealt a blow to its operations, forcing the company in May to submit a force majeure notice to Kenya’s petroleum ministry. It withdrew the note last month after talks with the government resulted in tax breaks and a 15-month extension of the project’s license, it said in its half-year briefing.

Kenya had targeted first commercial oil exports via a planned pipeline linking the oilfields to a port in Lamu, in 2022.