Kenya Revenue Authority (KRA) has demanded Ksh22 billion from Tullow Oil following the British explorer’s sale of its Kenyan assets.

Tullow completed the exit in September 2025 and recorded a $4.5 million (Ksh581 million) loss on the deal. The company now faces a major tax dispute with KRA.

Tullow sold its entire Kenyan business, Tullow Kenya BV, to Auron Energy (an affiliate of Gulf Energy) for a minimum of Ksh15.5 billion ($120 million). The sale covered Blocks 10BB and 13T in Turkana, where Tullow discovered oil in 2012. After more than 13 years in Kenya, the company had struggled to move the project into commercial production because of high costs, waxy crude, and transport difficulties.

The deal closed on September 25, 2025. Tullow received Ksh5.2 billion ($40 million) on completion. It collected another Ksh4.68 billion ($36 million) in March 2026 and Ksh516 million ($4 million) in April 2026. A final Ksh5.2 billion ($40 million) payment is due by June 2033, linked to oil prices. Tullow also kept royalty rights and a free 30 per cent back-in option for future development.

In its 2025 Full Year Results released on April 28, 2026, Tullow reported a Ksh581 million ($4.5 million) loss on the Kenya disposal. This loss reflects the difference between the net assets sold and the cash plus the present value of future payments received.

The tax claim

KRA issued an assessment of approximately $170 million (Ksh22 billion) for claimed underpaid VAT and capital gains tax on the sale of Tullow’s Kenyan subsidiary. The demand covers the period from 2020 to 2025.

Tullow strongly rejected the claim. In its official results, the company described the assessment as “wholly without merit”. It plans to contest the demand together with Gulf Energy through the normal objection and appeals process. Tullow has made no financial provision for the tax because it does not expect any cash to leave the business.

Tullow had been looking to reduce its presence in Kenya for several years. It classified the assets as non-core and focused its money and attention on Ghana. The company also sold its Gabon operations in July 2025 as part of the same strategy to simplify the business and cut debt.

Kenya’s oil project raised high hopes after the 2012 discoveries, but development proved very challenging. Partners reduced their involvement, and Tullow could not justify further heavy spending. The sale to Gulf Energy handed the licences to a local player with stronger government ties.

Impact on Kenya’s oil sector

The exit marks the end of Tullow’s direct role in Kenya. Many people in Turkana waited years for jobs and revenue that never fully materialised. Communities now look to Gulf Energy to deliver the long-promised commercial production.

The KRA tax claim adds uncertainty at a sensitive time. If KRA succeeds, it could increase costs for future oil deals in Kenya. If Tullow and Gulf Energy win the appeal, it may encourage more investors.

For Tullow, Kenya was a small part of a bigger picture. The 2025 results concentrated on strong progress in Ghana, including licence extensions to 2040, plans to buy the TEN FPSO, and new wells coming on stream. The company expects production in 2026 to hit the higher end of its guidance.