The Ministry of Petroleum and Mining has finally contracted a consultant to conduct an audit on Tullow Oil’s petroleum costs in Turkana’s blocks 10BB and 13T after several failed efforts in the tendering process.
Swale House Partners, the consultant, will carry out the audit extending over a period of six years between 2010 and 2016. The audit results will inform the ministry on how much Tullow will recover from the sale of crude oil when commercial production begins in 2021.
Tullow will claim all expenses drawn since 2010 when oil revenues started coming in, thereby, decreasing Kenya’s earnings from crude oil.
The Public Sharing Contract
The audit will also establish if Tullow has been observing the obligations written in the Public Sharing Contract (PSC) with the government that explains the levels of investments it should make in community projects and exploration.
“[The recruitment of a consultant] is done and the process is ongoing,” Andrew Kamau Petroleum Principal Secretary said.
Swale House Partners is also expected to advise on cost repercussions of the early oil pilot scheme which began last weekend when the transportation of crude oil by road began. The consultant will also train the employees in the Ministry of Energy so that they can carry out such audits in the future. Swale is expected to report back to the ministry in six months.
Investments are Likely to Increase
As commercial production of crude oil closes in, Tullow’s investments are likely to be more than the over Sh150 billion spent in exploration and appraisal.
In April, Tullow said it would invest nearly Sh290 Billion in the first phase of the commercial development stage. Part of the investment will finance construction of the production facility while Sh110 Billion will construct the pipeline.
In addition, the early oil pilot scheme, which is already in motion, is expected to increase costs that are estimated to be at least Sh4 billion.