Tullow Oil Kenya Managing Director Martin Mbogo demonstrates the firm’s progress during an interview at his Nairobi office on February 20, 2020. PHOTO | FILE | NATION MEDIA GROUP Oil firms recover their exploration costs over years once production and sale of the commodity start, which in Kenya’s case is planned for 2022.
Tullow, which has already struck a deal to sell its entire stake in its operations in Uganda, is seeking to sell down its stakes from its current 50 per cent to 30 per cent.
The Covid-19 pandemic has come as the last nail on the coffin of Kenya’s oil export dream as currently structured after British oil major Tullow Oil served the government with a force majeure notice, which means that it can no longer deliver its part of the contract.
This has now handed China the biggest opportunity yet to snap up the deal, after it emerged as the front-runner in the race to buy off the Kenyan oil project from the struggling British firm.
On Friday, Africa Oil Corp revealed to its shareholders in Canada that its partner here, Tullow Oil Kenya, had submitted notices of force majeure to the Ministry of Petroleum and Mining on Friday on behalf of the joint venture partners in the Turkana oil blocks.
A force majeure notice is declared when a company is unable to perform its obligations in a contract due to unforeseen events that can be described as an ‘act of God’ such as calamities, floods and disasters. In contracts, this is synonymous with filing for divorce or separation.
The Petroleum ministry confirmed it had received the notice but did not offer a comment on what it means for Kenya and the way forward.
“We are studying it,” Petroleum Principal Secretary Andrew Kamau said in a text message response to the Sunday Nation.
Tullow was still working on an official statement on the developments by the time we went to press.
The British firm, which has been struggling to remain afloat due to its global financial crisis, has found an excuse in Covid-19 to pull the plug on its operations in Kenya and force the government back to the drawing board.
TAX MEASURES In March, the British explorer shocked the Kenyan government after it slapped the Ministry of Petroleum with a Sh204 billion bill as compensation for its six-year works in the Turkana oilfields.The government rejected the bill, terming it excessive and […]