Tullow Oil to proceed with Kenya operations, suspends exit plan

Tullow Oil has suspended plans to exit the Kenya market which was intended through the sale of blocks in the South Lokichar Basin.

The explorer said it will instead continue conducting a comprehensive review of the project for alternatives to an eventual exit.

The government had extended Tullow Oil Kenya’s exploration of blocks 10BB and 13T to December 31, 2020, with Africa Oil’s chief executive Keith Hill, saying they would use the extended period to create a conducive atmosphere to move the project forward.

Overcome challenges

“We would like to thank the government of Kenya for granting us this extension which will allow the partnership sufficient time to overcome challenges in the current low oil price and pandemic conditions,” said Hill.

In May, Tullow and its Joint Venture Partners declared a force majeure (FM) on the Kenya licences.

The firm said that productive discussions with the government, an improvement in the Covid-19 situation and assurances from government that the tax incentives granted to the phased project will continue to apply led to withdrawal of the plan.

Tax-related misunderstanding arose in June, after the government started charging Tullow a 14 per cent Value Added Tax on goods imported or purchased locally contrary to an earlier exemption.

“We strongly believe in the value of the Kenya development project and will be spending the next year on optimising the project and removing all remaining obstacles to allow it to move forward,” Hill said.