Tullow oil intends to restart exploration and appraisal programme in South Lokichar in preparation to pilot oil production in the second quarter of 2017. A statement from the company said they intend on restarting in the second quarter of this year.
Tullow estimates that the South Lokichar basin has up to 750 million barrels of oil. This is the oil the government wants to produce and export to start earning revenues for the country.
In its production agenda, the government wants Tullow to produce 2000 barrels of oil a day and transport it by road to Eldoret before being transferred to the existing oil pipeline to Mombasa for onward export.
President Uhuru Kenyatta is expected to commission the road construction from Kitale to Lokichar later this year. The tarmac road construction should have commenced in January 2014 as part of the Memorandum of Understanding (MoU) signed when Lokichar residents demonstrated in November 2013 for failure by Tullow to grant them opportunities on their site.
While the oil reserves in Blocks 10BB and 13T seem adequate, civil society groups have cautioned the government against hasty production that will not earn the government and the people any tangible value. The Kenya Oil and Gas Working Group argued that at 2000 barrels a day, not even Tullow will make any profits but could a best try to break even. This means that the government will not earn revenues from the export, something that it has underpinned as the main reason for early export.
In the statement, Tullow announced its half year results ending 30 June 2016. The period saw the company make a profit after tax of $30 million and pre-tax operating cash flow of $256 million.