British oil explorer – Tullow’s lack of strategic partner could jeopardize Kenya’s oil dream

British oil explorer – Tullow’s lack of strategic partner could jeopardize Kenya’s oil dream

NAIROBI, Kenya – The lack of a strategic partner from British explorer Tullow Oil will end the dream of Kenya joining other oil-producing countries in Africa.

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Tullow Oil recently announced a merger with Capricorn Energy to create a leading African energy company, it is still working towards the target in its financial note for the first six months of 2022.

Despite expressing optimism about making progress by the end of the year, the company has hinted at doubts about the realization of the project’s value in use (VIU).

Earlier this year, Tullow said its assets in Kenya risk a further write-down of close to Sh30 billion if the government fails to hand over its production license on time.

Tullow statement “These items require satisfactory resolution before the Group can make a final investment decision. Due to the binary nature of these uncertainties, the Group was unable to adjust either cash flows or discount rates appropriately.”

Since the beginning of the year, the company says it has been in discussions with the government about the approval of its final development plan (FDP) and securing government results.

The FDP is currently under review with the Government of Kenya and is extending the review period to 6 November 2022.

“Furthermore, the company continues to move forward with the farm in the process of approvals being sought,” reads Tullow’s statement.

However, the company is hopeful of progress in Kenya’s oil projects under the new administration even though uncertainty has not changed in the past six months.

Tullow statement “A process to secure a strategic partner for the development project in Kenya is ongoing and we are confident that significant progress will be made before the end of the year.”

It said it will work with the new government to develop the project which has the potential to make a significant contribution to the Kenyan economy through taxation, revenue sharing, employment and local content.

The oil company estimates that Kenya’s onshore field in Turkana holds 560 million barrels of oil and is expected to produce up to 100,000 barrels per day starting this year for a maximum of 23 years.

It is expected to earn close to Sh280 billion every year from the project which translates to Sh6.4 trillion at the end of its life.

On previous occasions, Tullow Oil has defended and stood firm on the project’s profitability in the midst of uncertainty.

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