Tullow Oil Talks Kenya-comeback With Sh1.4 Billion Investment

March 7, 2024

After years of uncertainty, Kenya remains a beacon of hope for commercial oil production after it emerged that Tullow Oil has placed the country’s oil project at the forefront of its growth strategy.

The company’s commitment was reinforced by the submission of an updated Field Development Plan (FDP) to the Kenyan government in March 2023 by Tullow Kenya BV’s managing director, Madhan Srinivasan.

The ambitious FDP outlines the development of approximately 470 million barrels of oil equivalent (mmboe) resources, targeting a production pinnacle of up to 120 thousand barrels of oil per day (kbopd).

With an investment exceeding US$10 million (approximately sh1.4 billion), Tullow’s strategy received a nod from the Energy and Petroleum Regulatory Authority (EPRA), which extended the FDP review period until June 30, 2024.

“We are collaboratively working with the Government of Kenya as they evaluate the FDP. Once their evaluation is concluded, the FDP will be submitted to the Cabinet Secretary for Energy and Petroleum for review before submission to Parliament for final approval,” Madhan noted, also highlighting the project’s designed resilience against fluctuating oil prices and ongoing discussions with potential strategic partners to bolster the Full Field Development (FFD) plan for Project Oil Kenya.

Tullow Oil’s recent financial statement highlighted the significance of the Kenyan project as a key driver for their future value and growth.

According to Tullow Oil chief executive Rahul Dhir, the firm has not only met its targets but also surpassed them, generating over $1.1 billion in free cash flow and reducing net debt by more than 30 percent since the end of 2020.

The company reported $170 million in free cash flow, surpassing expectations, and achieved a reduction in net debt by over $250 million.

Additionally, Tullow has secured long-term financing through a $400 million debt facility agreement with the United Kingdom’s Glencore Energy, further solidifying its financial foundation.

It’s been over a decade since Tullow oil struck oil in Turkana, and it remains to be seen whether there will be any commercial drilling any time soon.

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