Kenya eyes 20pc stake buyback in Turkana oil
Saturday November 04 2023
Main pipeline that was to transport Turkana crude oil within the Port of Mombasa, Kenya under early production scheme that had been launched by the government. PHOTO | NMG
Kenya plans to buy back up to 20 percent in the Turkana oil project in what could eventually decide whether the government approves the project’s revised development plan and availability of funds.
On Thursday, Energy and Petroleum Regulatory Authority (Epra) director-general Daniel Kiptoo said the government is yet to make a decision on whether to exercise its back-in option provided by the production-sharing agreement.
“The production sharing contract gives the government a right to back in and join the contractor group by acquiring a 20 percent stake in the project,” said Mr Kiptoo.
Read: Kenya begins oil exploration in Lamu Basin wells
“This option is exercised once the field development plan is approved and the projects move from exploration phase to development phase,” he said.
According to the Epra boss, the government will decide on whether to activate the clause once ongoing review of the field development plan (FDP) has been concluded, which will determine the fate of the project.
British oil firm Tullow Oil owns 100 percent of the stake in blocks 10BA, 10BB and 13T in the South Lokichar Basin in Turkana.
This is after its joint venture partners TotalEnergies and Africa Oil Corporation, who had 25 percent stakes each in the blocks, offloaded their stakes to Tullow. Nonetheless, Mr Kiptoo said the option can be exercised directly or through a vehicle such as the National Oil Corporation of Kenya (Nock).
Read: Why Total and Africa Oil quit Kenya’s oil project
To underline the government’s intention to potentially buy back a stake in the venture, Nock this week hired a consultant that will, among other tasks, enable Nock to back in the oil project on behalf of the government.
Other oil blocks in the South Lokichar Basin are Amosing, Twiga, Etuko, Ekales-1, Agete, Ewoi, Ekunyuk, Etom, Erut and Emekuya.
“The general terms of reference of the consultant (include) support National Oil initiative for back-in-rights in Lokichar Basin discoveries. Provide leadership and support for national upstream to fully be on-boarded for back in rights on behalf of the government,” said the company.
Mr Kiptoo said the financial consideration of the back-in could play a major role on whether the green light is given, considering that the government will likely pay billions of shillings.
“Epra is currently reviewing the FDP and this (back-in) is a decision that is yet to be made,” he said.
Even as the review of the FDP continues, Tullow has struggled to find well-capitalised investors to partner with in the project following the exit of its JV partners.