Tullow Oil PLC has signed an agreement with Gulf Energy Ltd, inching closer to its exit from Kenya’s upstream oil sector, to sell its entire stake for a minimum cash consideration KSh 15.5 billion.
- •The transaction involves the sale of Tullow Kenya BV, which holds rights to approximately 463 million barrels of 2C contingent oil resources in the South Lokichar Basin.
- •According to Madhan Srinivasan, managing director of Tullow Kenya BV, the signing of the agreement with Gulf affiliate Auron Energy E&P Ltd will mark the end of a turbulent 15-year run in a prospect process slowed down by regulatory inertia and partner withdrawals.
- •Tullow will retain a back-in right for a 30% participation in potential future development phases at no historic cost, which can be exercised if a third party investor participates in future development phases.
“We continue to advance plans to optimise our capital structure during 2025. Coupled with the sale of our Gabonese assets, the disposal of these non-core assets is expected to provide cash proceeds of US$380 million in 2025,” Richard Miller, Chief Financial Officer and Interim Chief Executive Officer, Tullow.
The payment will be made in three phases: KSh 5.2 billion (US$40 million) upon deal completion expected before the end of Q3 this year, another KSh 5.2 billion (US$40 million) upon either government approval of the Field Development Plan (FDP) or by June 30, 2026, and a final tranche of KSh 5.2 billion (US$40 million) to be paid in quarterly instalments beginning 2028, subject to oil price thresholds.
The decision follows the prolonged review of the FDP by the Energy and Petroleum Regulatory Authority (EPRA), which extended its evaluation to mid-2025. The delay blocked the issuance of a production licence and stalled progress toward a Final Investment Decision. The situation was compounded by the 2023 withdrawal of joint venture partners Africa Oil Corporation and TotalEnergies, which left Tullow as the sole project backer.
Tullow has since written off US$145.4 million in Kenya-related costs and warned of further impairments of over US$100 million if the project remained in limbo. The company had previously indicated that its ability to unlock the estimated US$1 billion upside hinged on regulatory approvals and securing new investment partners.
In addition to the 30% no-cost right, the deal’s terms also include a royalty structure, allowing it to earn $0.50 per barrel on 80% of production volumes, subject to pricing and output thresholds.
Gulf Energy, a major player in East Africa’s downstream and midstream oil sector, is expected to lead the stalled oil dream forward. The oil firm is currently anchoring Kenya’s government-to-government (G2G) fuel importation arrangement with Middle Eastern suppliers and is no stranger to high-stakes energy transactions.
Though no longer active in petroleum retail, having sold its network of petrol stations to France-based Rubis Energy in 2019, the company remains a central player in state-backed crude and refined fuel procurement.
However, its success will depend on whether it can navigate the same challenges that ultimately forced Tullow to abandon Kenya’s oil dream after 13 years.
