Tullow to develop north Kenya fields despite low oil prices

Tullow Oil is working on a plan to develop its northern Kenya fields, it said in an update.

The UK explorer said it is working on a field development plan to best determine how to extract oil and associated costs.

“In Kenya, discussions with the Government regarding the draft field development plan for the discoveries in the South Lokichar Basin continue positively, with targeted submission by year end 2015,” said Tullow when it released its half-year results.

The explorer estimates that the South Lokichar Basin could hold as much as 600 million barrels of oil.

Tullow and its partner, Africa Oil of Canada, have recently sold stakes in their blocks to larger companies.

Tullow has sold a stake in its Block 12A to UK-based Delonex Energy for an undisclosed amount. “Tullow has agreed to farm down 25 per cent of its 65 per cent operated working interest in Block 12A to Delonex for a carry. The agreement is subject to government consent,” said the explorer.

Africa Oil owns a 20 per cent stake while the remaining 15 per cent, which belonged to Marathon Oil, has been sold to an unnamed explorer.

Similarly Africa Oil sold half of its interest in Kenya and Ethiopia to Maersk Oil for $365 million.

“We believe they bring significant technical, financial and infrastructure development capabilities at a critical time when the Lokichar Development and related pipeline projects are moving towards sanction,” said Africa Oil chief executive Keith Hill in a statement.

Before the sale to Maersk, Africa Oil sold a 6.83 per cent stake to the International Finance Corporation (IFC) for $50 million.

Proceeds from the private placement will fund exploration work on the South Lokichar Basin.

Africa Oil and its partner Tullow are going on with regional exploration despite low global oil prices which have led to a number of firms throwing in the towel.