Following the exit of Africa Oil Corp. and Total Energies from Project Oil Kenya in May 2023, Tullow Oil acquired complete control of the project with a 100% equity position. The Kenyan government has, however, initiated talks with two Indian State-owned Oil firms, Oil India and ONGC Videsh, to buy a stake in the oil blocks 10BB, 13T, and 10BA in the South Lokichar Basin, which is fully owned by the London Stock Exchange-listed company, Tullow Oil.
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According to Energy and Petroleum Cabinet Secretary Davis Chirchir, an estimated KES 469.5 billion ($3.4 billion) is needed to develop infrastructure at the South Lokichar basin to facilitate the development of the project. Production from the South Lokichar Development conventional oil development project is expected to begin in 2026 and is forecast to peak in 2027 at approximately 120,000 barrels per day of crude oil. This move by the government to source new investors will provide the much-needed capital that the British oil explorer has been looking for to cushion its risks for the multi-billion-shilling project that includes setting up a crude pipeline and processing facilities for the oilfields.
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The cabinet secretary highlighted that the kind of capital requirement in the development phase of the project in Kenya is about USD 3.5 billion, which, if left to Tullow Oil alone, will cause a lot of delays in the realization of the project. Tullow Oil also highlighted that getting a financial partner before the end of this year will provide enough cash to fund the next stage of the development and unlock value. However, the biggest challenge remains the risk capital that goes into a block where discoveries have not been made, which deems these regions unattractive to many investors—a situation witnessed in the Kenya oil project.
