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Indian oil companies confirm talks to buy Tullow Oil stake in Kenya
Friday, May 26, 2023
Tullow oil reservoirs in its Turkana field. file image | NMG
Two state-owned Indian oil companies are in talks to buy a stake in the Tulu oil project in Turkana, days after two partners exited the project after a decade of waiting for the project to take off.
Oil India and ONGC Videsh, the offshore investment arm of India’s Oil and Natural Gas Corp, are in talks to buy an undisclosed stake whose value remains unclear in the three oil blocks that are wholly owned by Tullow.
is reading: Tullow values the Kenyan oil stake at Sh32 billion as it looks to sell
The deal, if concluded, would provide the much-needed capital for which the British oil explorer has been looking for a strategic investor to mitigate the risks of the multi-billion-shillings project involving the construction of a crude pipeline and oilfield processing facilities.
“All I can say is that some discussions are ongoing,” Ranjit Rath, chairman of Oil India, told reporters Thursday in London.
The disclosure of a possible deal comes a day after Africa Oil and Total pulled out of the project amid concerns about the economic viability of the Turkana oil project.
Tullow fully owns the 10BB, 13T and 10BA oil blocks in the South Lokichar Basin but a combination of delays in tapping a partner and approving a commercial plan has delayed the project.
Cabinet Secretary for Energy and Petroleum Davies Churchir said on Wednesday that an estimated Ksh469.5 billion ($3.4 billion) is needed to develop infrastructure in the southern Lokichar Basin.
Tolo had earlier disclosed plans to sell off a significant portion of its initial 50 percent stake in the blocks, after running into financial hurdles of its own.
The company has been looking for an investor for at least three years in an effort to open the project. ONGC Videsh Ltd first held talks with Tullow Oil in Nairobi in July last year.
is reading: Tullow earned NIS 498 million from early oil exports
Tullow in June last year linked the future of the Kenyan Turkana oil project to the company and its partners with acquiring a strategic investor.
Africa Oil and Total, which each had a 25 percent stake in the project, pulled out on Wednesday, piling pressure on Tolo.
Tullow was optimistic about the prospects of securing a financial partner before the end of this year, who will provide cash to fund the next phase of development and unlock value.
Production from the Lokichar South Conventional Oil Development Project is expected to start in 2026 and is expected to peak in 2027 at approximately 120,000 barrels per day of crude oil.
Tullow changed the timing to get the final green light for Kenya’s onshore oilfields, which are expected to produce up to 100,000 barrels a day.
The BP is also awaiting the government’s decision on the Field Development Plan (FDP), which it submitted for review in March.
Kenya has set a December 2021 deadline for Tullow and former partners to submit a comprehensive investment plan for Turkana oil production or risk losing concessions in two exploration fields.
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