Kenya’s prospects of being an oil producer have dimmed following the completion of the Early Oil Pilot Scheme (EOPS) and no successor in sight. In a press statement with Joint Venture partners Total and Africa Oil, Tullow Oil confirmed that the EOPS contract expired on June 2, after running for a two year period.
Commenting on the completion, COO Mark MacFarlane;
The Early Oil Pilot Scheme has provided important lessons for the planning and execution of the Full Field Development phase of Project Oil Kenya. By producing, transporting, storing, and exporting crude oil from Northern Kenya, the pilot scheme has provided proof of concept for oil production in Kenya.
Tullow COO Mark MacFarlane
As a pilot project, the EOPS objective was to provide critical technical data, logistical and operational experience, and training. The conclusion means that the National and county governments and the joint venture partners will look into the results and steer the journey towards Full field development (FFD). EOPS made a historic first export of crude oil from East Africa in 2019 raking in KSh2 billion with Kenya’s oil marketed to the global markets.
READ ALSO: Tullow Oil Issues Notice of Force Majeure to Kenya’s Ministry of Petroleum
Tullow has divested from Kenya’s oil in 2020 selling its rights as oil prices crumble. In January, Tullow announced writing off $800 million (KSh80 billion) of the costs of its exploration in Kenya, and Uganda due to a lower oil price forecast and a reduction in reserves. Further, the firm announced plans to dispose of entire 50% stake in the Turkana oil project.
In mid-May, Tullow issued a notice of force majeure citing the impact of COVID-19 Pandemic, which has affected the company’s operations. Further developments such as tax changes and travel restrictions have impacted the projects’ economics. In addition, dropping global crude oil prices have worsened Tullow’s operations.
Kenya will need to decide the way forward to push the project to the Full field development (FFD).
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