London-listed independent Tullow Oil aims to make a final investment decision (FID) on its South Lokichar oil project in Kenya in 2022 and to start production in 2024.
The firm outlined the new timeline in an implementation programme presented to the government two weeks ago, according to commissioner of petroleum at the energy ministry Martin Heya. “The timelines bring the oil development project back on track and give confidence to the service providers,” Heya told Argus.
Tullow and its partners in the project, Total and Canada’s Africa Oil, had initially planned to reach FID in 2019 and first oil in 2021-22. But the decision was pushed back, first because the government took longer than expected to finalize land and water rights and then because the project partners declared force majeure in response to tax changes and COVID-19 restrictions.
The force majeure notices were withdrawn in August “following productive discussions with the government, an improvement in the COVID-19 situation and assurances from government that the tax incentives granted to the phased project will continue to apply”, Tullow said.
The project’s “foundation stage” will involve developing the Amosing, Ngamia and Twiga fields in the South Lokichar basin using a 60,000-80,000 b/d central processing facility and an export pipeline to the port of Lamu. Further development could see output plateau at over 100,000 b/d.
A pilot scheme to test the market’s appetite for Kenyan crude — which involved trucking oil from South Lokichar by road to the Indian Ocean port of Mombasa — ended in June this year.
Tullow is operator of the project with a 50pc stake, while Total and Africa Oil hold 25pc each. Tullow plans to sell part of its interest but suspended the farm-down process earlier this year to allow for a comprehensive review of the development concept.