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Tullow Oil, active in Turkana’s South Lokichar Basin, has cut its Kenyan operations budget by 33.3 per cent from $15 million (Sh2.1 billion) in 2023 to $10 million (Sh1.4 billion) this year.

The reasons for the budget cut have not been explicitly stated by the company, but it could be attributed to a strategic shift as the company awaits updates on the Field Development Plan (FDP) submitted to the government last March.

Energy Petroleum Regulatory Authority (EPRA) extended the review period for the updated FDP until June 2024. According to CEO Rahul Dhir, no other events since December 31, 2023 have had a material impact on the year-end results.

“On March 1 2024 Tullow received a letter from the EPRA extending the review period of the updated Field Development Plan to 30 June 2024. There have not been any other events since 31 December 2023 that have resulted in a material impact on the year-end results,” Dhir said.

He emphasised strategic planning, government collaboration, risk mitigation, and potential partnerships in Tullow Oil’s approach to its operations in Kenya.

“Kenya remains a material option to drive value and growth for Tullow. An updated Field Development Plan which intends to develop 470 mmboe of 2C resources to produce up to 120 kbopd, was submitted to the Government in March 2023,” Dhir stated.

Tullow, he said has since worked collaboratively with the government as they evaluate the FDP, adding that once their evaluation is concluded, the FDP will be submitted to the Cabinet Secretary for Energy and Petroleum for review before submission to Parliament for final approval.

“The development has been designed to be robust at lower oil prices and we continue discussions with prospective strategic partners for this project,” Dhir said.

Exploration activities

For 2024, Tullow Oil has outlined a capital expenditure plan totalling approximately $250 million (Sh35.6 billion). This includes allocations for operations in Ghana, the non-operated portfolio, Kenya, and exploration activities.

Additionally, funds have been earmarked for decommissioning activities in the UK and Mauritania, with provisions set aside for Ghana and Gabon. In 2023, Tullow Oil wrote off $17.9 million (approximately Sh2.6 billion) in exploration costs from Blocks 10BB and 13T, leaving a remaining recoverable amount of $242.2 million (Sh34.5 billion).

The impairment was recorded, potentially due to lower than anticipated oil prices, escalating costs, or heightened project risks.

Tullow Oil had joint venture partnerships with TotalEnergies and Africa Oil Corp, but both companies exited the project in May 2023, leaving Tullow Oil with full ownership.

The increased interest provides Tullow with greater strategic flexibility. The company is actively working with the Government of Kenya to develop options to accelerate production and cash flow to unlock value from this well-matured resource base.

Tullow Oil’s Early Oil Pilot Scheme (EOPS) in Kenya marked a significant milestone by successfully completing two years of production and accumulating essential reservoir and production data.

The scheme focused on the development of five existing wells in the Amosing and Ngamia fields, located in Blocks 13T and 10BB.