Monday, August 15, 2022

India to buy Turkana’s Tullow Oil stake for Sh.356.5 billion

Two companies that have the backing of India are looking to acquire a stake worth billions of money from Tullow Oil.

The two companies known as Indian Oil Corp and ONGC Videsh have the backing of the government of Indian.

The deal is estimated to be worth Sh. 356.5 billion. If it goes through, this deal will be one of the largest to ever take place in Kenya.

The two  companies will be the joint operators of the project once the deal is completed.

Tullow Oil is the current operator of the project. It has a stake of 50 per cent in blocks 10 BA, 10 BB and 13T in the South Lokichar Basin.

It’s partners, TotalEnergies SE and Africa Oil Corp hold 25 per cent stake each to make up the remainder of the stake.

Kenya’s south Lokichar fields in blocks 10BB and 13T are projected to produce 120,000 barrels of oil per day, with expected gross oil recovery of 585 million barrels over the full life of the field, according to Tullow. The company estimated the cost of production from the wells at $22 (Sh. 2,614) a barrel.

From an earlier plan, the waxy crude will be shipped from the fields via a 20-inch, 825-kilometer heated pipeline to a port in the Lamu.

Tullow Oil slaps Kenya with Sh. 204 billion compensation fee

The oil project has been facing headwinds and questions over its viability. In July 2022, Tullow Oil had announced that it was seeking for a strategic partner to kick-start and accelerate the project

“A confidential process to secure a strategic partner for the material development project in Kenya continues and Tullow is confident that it will make substantial progress in the second half of the year,” Tullow said.

Tullow says that it has so far spent an estimated Sh. 118 billion to prospect for oil and develop wells in Turkana. In 2020, the oil explorer slapped Kenya with a $2 billion (Sh. 237 billion) demand.

The oil explorer demanded for the money as compensation fee for the six years of exploration it has conducted in Turkana oilfields.

In December 2021, Tullow was asked to present a comprehensive investment plan for oil production in Turkana or risk losing concession on two exploration fields.

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