Tullow Oil’s exploration license in Kenya has been extended to 2021.
The UK based oil and gas exploration and production company has interests in over 70 exploration and production licenses across 14 countries, will still do exploration work on Kenya’s Blocks 10BB and 13T to the end of 2021.
Kenya’s Ministry of Mines and Petroleum has also approved the UK firm’s work program and budget for 2021.
Rahul Dhir, Chief Executive Officer of Tullow Oil Plc, said, “I would like to thank the Government of Kenya for granting this extension which the Joint Venture partners will use to fully re-assess the development concept for this important project.”
This extension allows Tullow, and Total, and Africa Oil, to reconsider plans for the development.
Tullow is an independent oil and gas exploration and production group, quoted on the London, Irish, and Ghanaian stock exchanges.
Speaking at Tullow’s recent Capital Markets Day, group executives talked of the importance of creating a project that would work at low oil prices while sticking with its phased development concept.
The partners will work with the government over the next few months on land and water agreements. The aim is to secure Environmental and Social Impact Assessments (ESIAs) and finalize the commercial framework.
Once this work has been completed, the Group will submit the Field Development Plans (FDPs) to the government.
Speaking at the Capital Markets Day, Tullow’s CEO Rahul Dhir said that Kenya held a substantial resource but that there were “many development challenges”, particularly low prices.
“The challenge is the complexity of the development … and there are land and water issues.”
Talking at the end of November, the executive said Tullow had secured extensions. Approval from the government for the 2021 work program was an outstanding step.
There is a “solid foundation of technical and commercial work” on the project. He said this stems from the six months of production data from the Early Oil Production Scheme (EOPS).
Tullow’s new focus has been on maximizing returns from its West African assets, in particular Ghana.
It has already exited Uganda after selling its assets to Total for US $500 million. Tullow will also receive a further US$75 million when a Final Investment Decision is taken on the development project plus contingent payments linked to the oil price payable after production commences.
Although Tullow will retain a financial link to the development project through the potential contingent payments, this transaction’s closing marks Tullow’s exit from its licenses in Uganda after 16 years of operations in the Lake Albert basin.
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