Kenya’s petrodollars dream will take longer to materialise as Tullow Oil plans to make its first commercial export of oil in 2028, marking the latest delay in the project.
This timeline contained in the Field Development Plan (FDP) submitted by the British firm to the government for review and approval, has been revealed for the first time by the Energy and Petroleum Regulatory Authority (Epra).
This is as the government recently extended the timeline for review of the FDP, which Tullow says has been optimised to be robust at low global oil prices, to June 30, 2024.
“The Authority is playing an advisory role that will inform its approval and progression to Final Investment Decision (FID) and ultimately full field development,” says Epra in its latest statistics report.
“The plan anticipates the attainment of first oil in 2028.”
This will, however, primarily depend on whether Tullow manages to secure a strategic partner to help finance the project after its joint venture partners – Canadian firm Africa Oil and French oil giant TotalEnergies – pulled out of the project in May last year.
Besides securing a strategic partner and requisite financing, the company has further said it will make an FID on the project contingent on being granted land and water access rights.
“The Group has identified the following uncertainties in respect of the Group’s ability to realise the estimated VIU (value-in-use); receiving and subsequently finalising an acceptable offer from a strategic partner and securing governmental approvals relating thereto, obtaining financing for the project and government deliverables in form of provision of required infrastructure and fiscal terms,” said Tullow in its latest annual report.
Kenyans have waited for years for the country to join the league of global oil exporters following the trial export of 240,000 barrels of crude in August 2019 under the Early Oil Pilot Scheme (EOPS), which fetched Sh1.48 billion.
It marked the first-ever lifting of oil from East Africa to the international market.
Kenya made the first commercial discovery of oil in Turkana in 2012 after more than 50 years of exploration.
Tullow, together with its former joint-venture partners TotalEnergies and Africa Oil Corp, had in March 2023 submitted a final FDP on the Kenya project for approval by the Ministry of Energy and Petroleum and the Energy and Petroleum Regulatory Authority, before the two partners pulled out.
The FDP outlines how Tullow intends to develop the oil fields, forecasts for production and costs, as well as how it plans to manage the impact of the project on the environment and society. The plan was based on a life of field resource of 585 million barrels gross, initial plateau production of 120,000 barrels of oil per day, and capital investment of $3.4 billion (Sh442.44 billion) for the first oil.
Tullow was expecting the approval process, including ratification by Parliament, to conclude last year, but this did not happen with the evaluation of the FDP pushed to March this year, then June.