Deep-pocketed Indian firms eye Tullow stake in Kenya oil
Saturday May 27 2023
Tullow Oil tanks in Turkana County, Kenya. PHOTO | JARED NYATAYA | NMG
Two Indian State-owned oil firms are in talks to buy a stake in Tullow’s oil project in Turkana, days after two partners exited the project after a decade of waiting for the development to take off. Oil India and ONGC Videsh, which is the overseas investment arm of the Oil and Natural Gas Corp of India, are in talks to buy an undisclosed stake whose value remains unclear in the three oil blocks that are wholly owned by Tullow.
A deal, if struck, will provide the much-needed capital that the British oil explorer has been looking for a strategic investor to cushion its risks for the multi-billion-shilling project that includes setting up a crude pipeline and processing facilities for the oilfields.
“All I can say is some discussion is going on,” Oil India Chairman Ranjit Rath told reporters on Thursday in London.
This comes after the British oil major parted ways with two minority shareholders who jointly held 50 percent stake in the $3.4 billion oilfield in Kenya’s South Lokichar Basin, Turkana County.
Read: Why Total and Africa Oil quit Kenya’s oil project
A reliable source told The EastAfrican that the exit of the two minority shareholders from the joint venture is a “good” development for the Kenyan operation, as it clears the way for investors with financial muscle to carry out the project to a successful conclusion.
“This is good development for Kenya. This is how Tullow operates,” he said.
According to Moneycontrol, an online business publication, the two Indian oil firms also face competition from super-aggressive Chinese energy giant Sinopec, which has entered the fray taking advantage of the delay on the Indian firms’ part in finalising the deal.
Tullow termed this a low-cost development “that has the potential to unlock material value for Kenya.”
“The Board considers that owning 100 percent of the Project creates more optionality, gives Tullow more flexibility in the process to secure strategic partners, creates a simpler Joint Venture Partnership and streamlines project delivery,” said the oil major listed on the London Stock Exchange.
It disclosed that prospective strategic partners have been informed about the exit of the minority partners.
Read: East Africa oil and gas: The Total takeover
“The prospective strategic partners have been informed. They remain engaged and detailed farm-out discussions continue with a number of companies,” said Tullow. “While the process has taken longer than expected, Tullow remains focused on securing a strategic partnership this year.”
According to Africa Oil Corp, it is carrying value of the Kenya intangible exploration assets was written down to $58.6 million on December 31, 2022, and the company intends to further impair this value to zero.
“We have taken the decision to exit our Kenya concessions as our strategy has shifted to focus on production and high potential exploration opportunities, including our Orange Basin portfolio where we are now appraising the exciting Venus discovery, offshore Namibia,” said Keith Hill, Africa Oil President and Chief Executive.