Tullow Oil set to pump Sh7 billion into its Kenyan operations in 2019 ahead of commercial production 2022

British company Tullow Oil plant in Turkana county, Kenya
  • In a trading update on Wednesday, Tullow said the additional capital will be spent on developing wells in Turkana County.
  • The company plans to commit to commercial oil production this year in a process that will include signing contracts with the Kenyan government.
  • The company continues to transport crude oil, an estimated 600 barrels per day, by road to Mombasa ahead of the planned small-scale (early oil) exports.

London-based Tullow Oil Plc plans to pump Sh7 billion in its Kenyan operations this year as the multinational steps up preparations for commercial production starting 2022.

In a trading update on Wednesday, Tullow said the additional capital will be spent on developing wells in Turkana County where the multinational discovered an estimated 1.2 billion barrels of oil reserves.

“The group's 2019 capital expenditure is expected to total approximately $570 million (Sh57.5 billion), comprising … Kenya pre-development expenditure of circa $70 million (Sh7 billion),” Tullow said.

The company added that it plans to commit to commercial oil production this year in a process that will include signing contracts with the Kenyan government.

Tullow made substantial progress in Kenya in 2018 and continues to target final investment decision (FID) in late 2019 and First Oil in 2022,” the company said.

“This will require several key milestones to be achieved throughout 2019 including land acquisition, commercial frameworks and contract awards,”

The government has said Kenya’s oil production is profitable from $34 (Sh3,400) per barrel, indicating a potential windfall from the current international crude oil price of $58.

At the moment, the company continues to transport crude oil, an estimated 600 barrels per day, by road to Mombasa ahead of the planned small-scale (early oil) exports in the coming months.

“This is expected to increase to 2,000 barrels of oil per day from April 2019. Currently, there are 60,000 barrels of oil stored in Mombasa with a maiden lifting expected in the first half of 2019.”

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