Tullow Oil intends to maintain its yearly investment of Sh1.6 billion ($10 million) in Kenya’s oil project, demonstrating a continued commitment to the project that has persisted since its discovery in 2012.
The British oil explorer, in the latest trading update, said it plans to trim its overall capital spending across countries it has a presence in from $380 million (Sh61.95 billion) to $250 million (Sh40.76 billion) as it takes a drilling break in Ghana.
Kenya’s budget for this year is the same as that spent last year and will be equal to four percent of Tullow’s planned overall capital spending.
Tullow will formally issue the full-year trading results in March, in which it is expected to give further details on the progress of Kenya’s oil project. The project has suffered several setbacks, delaying key decisions.
TotalEnergies and Africa Oil Corp, who held a 25 percent stake each in project oil Kenya, pulled out in May last year over what was explained as “differing internal strategic reasons,” leaving the London-listed firm alone in the oilfields.
The withdrawal of the two firms left Tullow as the sole partner in the project, a development it said created a more flexible proposition for a strategic partnership. Tullow said it was continuing with discussions with several interested parties.
There has also been a delay in getting approval on its final field development plan (FDP)—a document that outlines how Tullow intends to develop the oil fields, forecasts production and costs, as well as how it plans to manage the impact of the project on the environment and society.
Tullow, together with TotalEnergies and Africa Oil Corp., submitted the plan for approval to the Energy Ministry and the Energy and Petroleum Regulatory Authority in March last year, before the two partners pulled out.
The plan was based on a life-of-field resource of 585 million barrels gross, an initial plateau production of 120,000 barrels of oil per day, and a capital investment of $3.4 billion (Sh554.3 billion) for the first oil.
Tullow was expecting the approval process, including ratification by Parliament, to conclude last year, but this did not happen, even as its two partners pulled out.
The firm re-evaluated the risks of reaching a final investment decision due to the departure of two partners, resulting in a $9 million (Sh1.47 billion) impairment.
