Tullow to start oil production three years after investment decision

Tullow Oil expects to start oil production from the reserves it found in Turkana after three and a half years when an investment decision is made. In its latest full year financial results for 2015, the company said it has completed appraisal from the exploration in South Lokichar.

The findings of the appraisal will be used to guide the investment decision, which is likely to be made next year or the year after, explained Peterson Thiong’o, Tullow Oil Kenya communication officer.

The company announced that it has so far discovered 600 million barrels of oil in South Lokichar, Turkana South Constituency in Turkana County.

According to the statement, Tullow spent $115 million in 2015 for exploration and appraisal and $190 million for development. It forecasts to spend $150 million for development in 2016.

Commenting on the report, Aidan Heavey, the CEO said

As we look ahead, we have a portfolio of world class, low cost oil assets which will produce around 100,000 barrels of oil per day in 2017 and a major position in one of the world’s newest, low cost, oil provinces in East Africa, both enabling us to create substantial value.

The Kenyan government has been looking forward to the oil being produced as soon as this year, including transporting them by road with tanks from Lokichar to Kitale, for onward transport by pipeline to Lamu for refining. This could however be further from being realized in the short term.

The road from Kitale to Lokichar is in bad shape, which partly contributes to constant banditry attacks when Pokots and Turkana’s fight over cattle rustling or killings of one of them. A tarmac was supposed to be constructed starting January 2014 by the National Government but this is yet to commence. The agreement to construct the road was part of the details agreed when Lokichar residents picketed at the plant, stopping exploration that lead to brief evacuation of staff in September 2013 against what they felt were opaque business practices by Tullow.

Tullow is also exploring oil in Cheptuket-1 well, the first well to be drilled in the Kerio Valley Basin, Baringo County.

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