Africa Oil Corp and Total Energies exit Tullow deal

Oil and gas exploration and production firm Tullow Oil has acquired complete control of the Turkana County-based “project oil Kenya” following the withdrawal of its two joint venture partners, Africa Oil Corp and Total Energies from the project. 
With the exit of the two firms, Tullow will assume a 100% equity position, subject to the government’s approvals. The company is also expected to continue its work with the government and its host communities to make the region a significant energy-producing province.
Tullow Kenya BV managing director Madhan Srinivasan, while reiterating the firm’s commitment to ongoing work in the South Lokichar basin project, said that the firm is engaging strategic partners who have expressed an interest in the project based on its economic viability.
“Project Oil Kenya is a low-cost development project that has the potential to unlock material value. Prospective strategic partners remain engaged, and detailed farm-out discussions continue with a number of companies,” Mr Srinivasan said.
Tullow said that it had been informed by its two minority partners of their intention to issue notices of withdrawal from blocks 10BB, 13T and 10BA in the South Lokichar Basin for differing internal strategic reasons.

“As a result, Tullow’s working interest in these blocks will increase from 50% to 100%. The Board considers that owning 100% of the project creates more optionality, gives Tullow more flexibility in the ongoing process to secure strategic partners, creates a simpler Joint Venture Partnership and streamlines project delivery,” Mr Srinivasan said.

He added that the project progress continues, and the updated Field Development Plan (FDP) was submitted to the Kenyan regulator, Energy and Petroleum Regulatory Authority (EPRA), in March 2023 and is now under review by EPRA.
Following the withdrawal of the minority partners, Tullow’s net Project 2C contingent resources are expected to increase from 231 mmboe to 461 mmboe.
This will take the group’s total contingent resources from 605 mmboe to 836 mmboe. Net capex (capital expenditures) guidance for 2023 in Kenya will increase from c.$10 million to c.$15 million, less than 5% of Group capex.
“Whilst introducing strategic partners has taken longer than expected, Tullow remains focused on securing strategic partners this year,” Tullow noted in a statement.
The Programme Based Budget of the national government for the year ending June 30, 2024, published last month by the National Treasury, indicates a Sh651.2 million budgetary allocation for the State Department for Petroleum geared at advancing the oil project. The document also indicated that finalising the FDP process is a high priority within the programme.

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