Hundreds of jobs hangs in the balance as the going get tough for Tullow Oil Kenya

President Uhuru Kenyatta officially flagging off the first Kenyan crude oil shipment at Mombasa. (courtesy)
  • In a redundancy memo on Wednesday, the UK oil firm said it has had to review business operations to ensure resources are allocated in the most efficient way possible.
  • Tullow’s latest move has deepened doubts on the viability of the country’s oil exploration. The job cuts plan, comes hot on the heels of the firm decision to sell its entire stake in Kenya.
  • Tullow has set the capital expenditure for its Kenyan operations at Sh4.06 billion ($40 million) for the year 2020, nearly half of what it spent last year.

When it rains it pours seems to best describe British oil firm, Tullow Oil, tribulations.

The oil firm has announced plans to send several of its employees in the Kenyan unit packing as it tries to stay afloat and cut operational costs in the face of financial constraints.

In a redundancy memo on Wednesday, the UK oil firm said it has had to review business operations to ensure resources are allocated in the most efficient way possible.

''Due to this review, it has become necessary to restructure the company with some roles becoming unnecessary,'' Tullow Oil Kenya managing director Marin Mbogo said in a statement.

The company which has 650 employees in the country has promised to pay all the affected employees a redundancy package comprising up to date salaries, severance dues and accrued but unconsumed leave days.

There are also fears that the British oil firm may altogether bolt out of the country and exit the Kenyan market. The group’s workforce is expected to be cut by approximately a third globally, with potential office closures in Dublin and Cape Town among a number of measures to reduce costs and overheads.

Tullow’s latest move has deepened doubts on the viability of the country’s oil exploration. The job cuts plan, comes hot on the heels of the firm decision to sell its entire stake in Kenya.

Kenya’s Early Oil Pilot Scheme (EOPS) commenced in June 2018 marking the beginning of the journey towards full development of Kenya’s oil and gas resources. The Kenyan government is eyeing full commercial output sometime in 2023.

These coupled with plans to cut its capital investment in the Kenya project, is likely to pour cold water on the government of Kenya oil export project hyped by the government as among Kenya’s key economic breakthroughs.

Tullow has set the capital expenditure for its Kenyan operations at Sh4.06 billion ($40 million) for the year 2020, nearly half of what it spent last year - Sh7 billion.

The project is currently at a critical stage in the Kenyan project, where Tullow together with its joint venture partners (Total and Africa Oil) as well as the Government, are preparing the Final Investment Decision (FID) in the second half of 2020.

The FID was expected to be signed in the course of last year but pushed to 2020 owing to the project’s failure to achieve key milestones before the partners can commit.

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