British oil explorer Tullow Oil is locked in a vicious fight with Kenya over the London Stock Exchange-listed firm’s demand for Sh204 billion as compensation for its six-year works. FILE PHOTO | NMG British oil explorer Tullow Oil has valued its assets in the Kenyan oil project at Sh69.3 billion ahead of plans to sell part of its stake.
The valuation now reveals for the first time what an interested investor will have to table for a piece Blocks 10BB and 13T where Tullow has a 50 percent stake.
The firm in the just released annual report for the year 2019 also valued its Ugandan assets at close to Sh100 billion as it raised concerns over a number of hurdles in the quest for commercial oil production.
‘The carrying values in respect of Kenya and Uganda constitute $667 million and $960 million respectively of the Group’s E&E assets. Given the assets’ importance to the Group in terms of longer-term production and the level of estimation uncertainty in the determination of their recoverable amounts,” Tullow wrote in the report.
The firm, which is the lead entity in the Turkana oil fields had in February announced that it was willing to sell part of its stake in the project.
French oil major Total, meanwhile, aims to sell up to half of its 25 percent stake in the Kenyan project.
The Tullow price for Kenya assets now values the entire at about Sh140 billion, but it is hard to be precise because the development has yet to receive a final investment decision (FID).
Tullow remains uncertain if the FID will be ready this year as planned earlier, describing the timeline as “challenging”.
The fields already produce about 2,000 barrels of oil per day as part of an early production system.
The oil is trucked from Turkana to the port city of Mombasa. A first cargo of 250,000 barrels was shipped on a tanker last August.
The project partners have also agreed with the Kenyan government to develop a crude oil pipeline from Lokichar to Lamu on Kenya’s coast.Tullow and Toronto-listed Africa Oil, which holds a 25 percent stake in the blocks, first discovered crude oil in the Lokichar basin in 2012.Tullow estimates the fields contain 560 million barrels in proven and probable reserves and expects them to produce up to 100,000 barrels per day from 2022.
