All posts tagged Kenya

Tullow Gets Licence Extensions, Even though It Will Leave Kenya

Section: Farm in, Farm Out · December 9, 2020 · No comments |

By Bunmi Aduloju

The Kenyan government has granted the application of Tullow Oil and its Joint Venture partners for tenure extension for Blocks 10BB and 13T, even though the London listed company is working on selling its stakes in the asset

The country’s Ministry of Mines and Petroleum approved the work programme and budget for 2021, in which the partners pledge to re-assess Project Oil Kenya and design an economic project at low oil prices whilst preserving the phased development concept of the Field Development Plan. Tullow announced this extension on December 8, 2020.

The company had reported, three months ago, that its farm-down process in Kenya had been suspended “pending a comprehensive review of the development concept and strategic alternatives”.

The company had also noted, in earlier briefs, that it would use the extended time frame, when granted, to work on “submitting an updated Field Development Plan by end of 2021”.

The phased development concept proposes that the Amosing, Ngamia and Twiga fields should be developed as the Foundation Stage of the South Lokichar development. This stage would include a 60,000 to 80,000BOPD Central Processing Facility (CPF) and an 892km export pipeline to Lamu. The installed infrastructure from this initial phase can then be utilised for the optimisation of the remaining South Lokichar oil fields, allowing the incremental development of these fields to be completed at a lower unit cost post-First Oil.

Tullow Oil’s suspension of its planned farm down, however, doesn’t mean that the company has a future in Kenya. The farm down process will restart, after government has agreed on a new template for development, sometime in 2022.

Tullow’s Sale of Kenyan Asset Is Suspended

Section: Farm in, Farm Out · September 9, 2020 · No comments |

Tullow Oil has reported that the farm-down process in Kenya has been suspended “pending a comprehensive review of the development concept and strategic alternatives”.

The company and its partners, Africa Oil Corp. and TOTAL received a 15-month licence extension from the authorities on the 10BB and 13T licence blocks, which hosts the crude oil reservoirs that are the subject of development. Under the terms of the extension, partners have the right to extend the second exploration period for the blocks until 31 December 2020, with a further extension until 31 Dec 2021, contingent on an agreed work programme and budgets.

The partners are to use the extended time frame to work on “submitting an updated Field Development Plan by end of 2021”, Africa Oil says in a statement, a public admission that a Financial Investment Decision is unlikely to be taken any time before mid-2022

The Africa Oil+Gas Report had earlier reported that the Kenyan Oilfield development would not reach FID before mid–2021. But that date, has now proven too optimistic.

The extant plan is that the Amosing, Ngamia and Twiga fields should be developed as the Foundation Stage of the South Lokichar development. This stage would include a 60,000 to 80,000BOPD Central Processing Facility (CPF) and an 892km export pipeline to Lamu. The installed infrastructure from this initial phase can then be utilised for the optimisation of the remaining South Lokichar oil fields, allowing the incremental development of these fields to be completed at a lower unit cost post-First Oil.

Kenya Hops on the Subsidy Highway for Petroleum Products

Section: Downstream · August 10, 2020 · No comments |

Kenya, a non-hydrocarbon producing country, is tinkering with the subsidy initiative, to cushion effects on motorists whenever there is a high spike in the cost of petroleum products.

A subsidiary legislation, currently under review in the country’s parliament, grants powers to the Petroleum Cabinet secretary to pump in money from a subsidy fund to product suppliers to cut fuel prices and cushion motorists from sharp spikes

The subsidy will be supported by money that will be raised from fuel consumers through the Petroleum Development Levy, which was increased in mid July 2020 to $0.05 (or Sh5.40) a litre of fuel from $0.0036 (Sh0.40), a 1,250% rise.

“The Cabinet Secretary may by writing to the administrator, request for a draw down from the Petroleum Development Levy Fund to stabilise local petroleum prices where he deems necessary,” the Legislation says.

So, in a way, the subsidy is not coming from the treasury, rather, from funds that motorists themselves have contributed. This is the difference with the fuel subsidies in Egypt and Nigeria.

Fuel prices I Kenya ratcheted up to a 13 year high as the surge in Petroleum Development Levy, coalesced with increase in crude oil prices.

From mid-July, Motorists in Nairobi started paying $0.85 (Sh91.87) per litre of diesel from $0.69 (Sh74.57, representing a $0.16 (Sh17.30) increase, and $0.105 (Sh11.38) more for a litre of super petrol at $0.92 (Sh100.48)..

The Cabinet Secretary (Kenya’s title for minister) will determine the amount of subsidy fuel consumers will be offered when prices rise by large margins.