Page 4 - AfrOil Week 27

AfrOil COMMENTARY AfrOil

Tullow drilling site in Kenya (Image: Tullow Oil)

Bump in the road

Tullow Oil’s exit from Kenya is likely to be slow and complicated, owing to local

officials’ questions about costs, force majeure declarations and other issues

EARLIER this year, Tullow Oil (UK/Ireland) discoveries with its partners Total and Africa Oil
laid the groundwork for a graceful exit from (Canada) since 2012, and it has said the blocks
WHAT: East Africa. may hold as much as 560mn barrels of crude in
Tullow is confronting In April, the company arranged to sell all of proven and probable reserves.
questions about its plans its assets in Uganda to France’s Total, thereby Last year, though, the company revealed that
to exit Kenya. removing some of the main obstacles to devel- it intended to reduce its stake in these Kenyan
opment of crude deposits near Lake Albert. It assets from 50% to 30%. Then in January 2020,
WHY: did so several months after it began outlining sources familiar with the matter told Reuters
Government officials in plans for divesting all or part of its holdings in that Tullow was ready to unload all of its stake
the East African country Kenya as part of a wider effort to streamline in the blocks in order to make more resources
want more information operations and reduce expenditures. available to cope with the challenges it has
from the company. As such, it had already made some progress encountered offshore Ghana and Guyana.
with respect to restructuring by the time the The sources went on to say that the company
WHAT NEXT: coronavirus (COVID-19) pandemic erupted had arranged for Natixis, a French investment
The exit process is likely and world oil markets started to crash, making bank, to act as its agent for the sale. Additionally,
to be slow and compli- cost-cutting an even more urgent task. they claimed that Natixis was slated to perform
cated rather than quick Nevertheless, it may now fall behind again, the same service for Total, which was looking
and easy. as its plans to exit Kenya appear to have run into to unload up to half of its 25% stake in the Ken-
a snag. yan blocks. (Since then, the French company
has said it will not commit to cover its share of
What’s at stake budget expenses for the South Lokichar project
Tullow is leading development efforts in three in 2020.)
licence areas in Kenya’s South Lokichar Basin – Tullow did not confirm reports of its plan to
Blocks 10 BA, 10BB and 13T. It has made several exit Kenya at that time.

P4 www. NEWSBASE .com Week 27 08•July•2020