Tullow Oil notes that the signing of the commercial Heads of Terms with the Government of Kenya and Joint Venture Partners, Total and Africa Oil Corporation, in June 2019 has been instrumental towards progressing the project’s activities as detailed below;
- The upstream and midstream (pipeline) Engineering, Procurement and Construction (EPC) tenders are expected to be issued to the market by the end of 2019.
- Well tender activities are on track, with bids received and evaluations ongoing.
- The midstream Environmental and Social Impact Assessment (ESIA) has been submitted to the National Environment Management Authority (NEMA) with approval expected in the first quarter of 2020.
- Consultations for the upstream ESIA are ongoing, ahead of the ESIA being shared with NEMA before the end of the year.
- National Lands Commission (NLC) has now completed over 75% of the midstream land surveys and valuations. This work is now complete in four out of six counties affected.
- A draft framework agreement for use of water from the Turkwel Dam has been prepared and is currently being negotiated.
Kenya exported East Africa’s maiden cargo of crude oil (240,000 barrels of oil) on 26th August 2019, with the consignment flagged off from the Kipevu Oil Terminal in the Port of Mombasa by H.E President Uhuru Kenyatta. This marked an important milestone in the Country’s strides towards the development phase of Project Oil Kenya and an eventual target of full commercial production from its oil discoveries located in the South Lokichar Basin, Turkana County.
- Crude oil consignment sold to ChemChina UK Ltd at a price of $12 Million (price determined according to the them prevailing international crude oil prices).
- ChemChina UK Ltd outbid seven (7) other bidders representing European and Asian refineries.
- Proceeds of oil sale to be used to offset expenses incurred throughout the EOPS project phase, hence no revenue share.
The oil export campaign is part of the ongoing Early Oil Pilot Scheme (EOPS) project which currently evacuates 2,000 barrels of oil per day, trucked from Lokichar to Mombasa. It was announced that EOPS would continue for the next 18 to 24 months.
Additionally, the Joint Venture Partners and the Government of Kenya are set to commence discussions with prospective lenders for the project financing of the export pipeline that will run from Lokichar, Turkana to the new Lamu Port at Manda Bay.
The Final Investment Decision (FID) for Project Oil Kenya continues to be targeted in the second half of 2020, with full commercial production (First Oil) tentatively targeted for 2024.