Page 5 - AfrOil Week 27

AfrOil COMMENTARY AfrOil

Most industry observers agreed that such a move Ministry of Petroleum has asked the company to
made sense in light of the company’s financial explain its reasons for the declaration. It has also
and operational woes, including the fizzling of pointed out that Tullow should have consulted
its early oil production scheme (EOPS) and a the ministry before taking such a step.
loss of $1.7bn in the 12-month period ending “We want Tullow to tell us the thinking
in March 2020. In the meantime, Kenya’s gov- behind [force majeure] and what it means for
ernment did not raise any objections. Instead, it [the] project,” said Petroleum Ministry Principal
requested that the company follow normal pro- Secretary Andrew Kamau.
cedure and explain its intentions. The declaration has put a hold on Kenya’s
So far, though, Tullow has failed to satisfy efforts to use EOPS as a means of establishing
Kenyan authorities on this front. Instead, it has the country as a crude oil exporter. It is also
fallen into a dispute with members of the coun- likely to prevent shareholders in the project from
try’s parliament. making a final investment decision (FID) later “
this year, as previously planned. Kenya’s Ministry
Questions about the exit plan
Earlier this week, The EastAfrican weekly Asking for an accounting of Petroleum has
reported that members of the parliamentary Meanwhile, the ministry is not the only party asked Tullow
energy committee had raised a number of objec- looking for answers.
tions to the exit plan. The energy committee has launched an to explain its
Specifically, it said that MPs had disputed independent probe of the matter, accusing
Tullow’s claim for $2.04bn in compensation Tullow of “dishonesty” with respect to disclo- reasons for the
for expenses related to exploration work in the sure requirements. Additionally, it has ordered
South Lokichar Basin over a period of six years. the company to make more information on its declaration of
An audit conducted by Swale House Partners at operations available and respond to questions force majeure
the request of Kenyan authorities puts that fig- about expenditures and revenue-sharing plans
ure at just $1.6bn, they noted. This discrepancy, related to EOPS.
along with the government’s refusal to divulge “Tullow has not been honest and wants to
full details of the audit report, makes further run away from its responsibilities,” Gikaria was
investigation necessary, they said. quoted as saying by The EastAfrican. “Invoking
“Parliament must scrutinise all the expendi- force majeure throws Kenya’s project off track
tures to ascertain they are genuine, because and only defers the country’s dreams of com-
it’s our duty to protect Kenyan taxpayers,” said mercial oil exportation.”
David Gikaria, the chairman of the energy com- But Tullow is not just concerned about its
mittee. He did not say how long this probe might obligations. According to the weekly, the com-
last. pany may also be motivated by concern about
the fate of the Kenyan project. That is, Total’s
Force majeure announcement that it would not meet all of its
The process is likely to be complicated, though, investment commitments to the South Lokichar
as it will probably overlap with an investigation Basin this year may have led Tullow to ponder
of Tullow’s decision to declare force majeure in whether it would be more prudent to hang on to
May. Kenyan officials suspect that the company its Kenyan assets (and possibly incur additional
took this step with the hope of derailing its oper- losses) or look for the nearest exit.
ations in the South Lokichar Basin and speeding Unfortunately, though, the nearest exit seems
up its exit from Kenya. to be blocked. Tullow will have to negotiate fur-
According to The EastAfrican, the Kenyan ther before leaving Kenya. ™

Week 27 08•July•2020 www. NEWSBASE .com P5