Tullow targets to recover up to Ksh9.2tr from Kenya oil project

British oil exploration company Tullow Oil estimates it can extract up to 971 million barrels of oil from its proposed 25-year concession in Kenya, according to the latest Field Development Plan (FDP) that it has submitted to the Kenyan government for approval.

According to the Energy and Petroleum Regulatory Authority (EPRA), which is in charge of scrutinizing Tullow’s plan, the oil company estimates to extract between 240 and 971 million barrels of oil from oil blocks 10BB and 13T located in the South Lokichar Basin in Turkana County.

Brent crude was selling at about $74 per barrel on the global market on Monday, a price that would translate to a minimum return of Ksh2.2 trillion and a maximum of Ksh9.2 trillion for Tullow using the day’s average exchange rate of Ksh129 against the US dollar, according to the company’s FDP.

EPRA said the government is still evaluating Tullow’s latest FDP. According to the energy regulator, Tullow’s plan shows not only how it plans to develop the resource in the two oil blocks but also additional appraisal and exploration activities aimed at optimizing resource extraction within the designated development area.

“The development aims to tap into discovered Stock-Tank-Oil-Initially-In-Place (STOIIP) range spanning from 1,620 to4,573 million barrels and anticipates the recovery of an estimated 240 to 971 million barrels of contingent resources over the course of the 25-year contract period,” said EPRA in its latests statistics report for the energy and petroleum sector covering the financial year 2023/24.

EPRA says that Tullow has taken a well-structured phased infrastructure-driven approach where it will begin by developing the necessary facilities and drilling the most sizeable and technically advanced reservoirs.

In order to achieve the production of First Oil and support the initial production plateau, the Ngamia, Amosing, Twiga and Ekales fiels, which are collectively referred to as “NEAT” will be developed within the first 5 years of the development period, according to Tullow’s plan.

Tullow remains the sole developer of the project after its Joint Venture partners – TotalEnergies and Africa Oil Corporation – pulled out in May 2023, leaving Tullow scrambling for new investors to help inject new life into the oil project.

Should the firm manage to secure a well-capitalized partner as well as necessary regulatory approvals and requests such as access to land and water rights, it has tipped First Oil to be attained in 2028, which is an ambitious target owing to the frequent delays that have hampered various stages of the project’s implementation.

Tullow so far remains Kenya’s most realistic option to achieve its long-held dream to achieve the elusive status of an oil exporting country, a position that comes with considerable wealth.

Kenya has four major sedimentary basins, which hold considerable potential for fossil fuels primarily crude oil, natural gas and coal. The four are Lamu Basin, Anza Basin, Tertairy Rift and Mandera Basin.

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