Saturday, July 13, 2024

Tullow Oil slaps Kenya with Sh. 204 billion compensation fee

Turkana Oilfields: London Stock Exchange listed oil explorer Tullow Oil has slapped Kenya with a Sh. 204 billion demand. The oil explorer is asking for the money as compensation fee for the six years of exploration it has conducted in Turkana oilfields.

However, this bill has been rejected by the Ministry of Petroleum. According to a report that appeared in the Business Daily on Wednesday, Tullow requires commitment from the government that Kenya owes the firm $2 billion (Sh. 204 billion) and wants to use the pledge to sweeten the offer for sale of its stake.

“Tullow, which has a 50 percent stake in blocks 10 BA, 10 BB and 13T in the South Lokichar Basin, submitted the compensation bill last week” says the report. The report further says that Tullow Oil, which is facing financial difficulties will be thrown deeper into turmoil should Kenya fail to pay up.

Co-Op post

“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. The disagreement over the bill also adds to Tullow’s financial constraints that have seen the firm plan to cut a third of its staff to save about $20 million after being hit by weak output in Ghana, delays in East Africa and lower-than-hoped-for oil quality in Guyana,” it says.

Tuju and his family now face bankruptcy charges

“Tullow and Toronto-listed Africa Oil, which holds a 25 percent stake in the blocks, first discovered crude oil in the Lokichar Basin in 2012. Tullow estimates the fields contain 560 million barrels in proven and probable reserves and expects them to produce up to 100,000 barrels per day from 2022,” the report says.


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