Tullow's Kenya Oil Operations Threatened as Impasse Endures

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Tullow's Kenya Oil Operations Threatened as Impasse Endures
By
David Herbling
and
Paul Burkhardt
Tue Jul 17 2018 12:30:48 GMT+0200 (CEST)Updated on Wed Jul 18 2018 09:30:16 GMT+0200 (CEST)

• Company has faced weeks of disruptions to crude shipments
• Celebration of over nation’s oil shipments been short-lived

Tullow Oil Plc may shut down operations in northern Kenya in two weeks unless persistent issues with local residents, which threaten progress of the project, are resolved.


Disruptions in the remote Turkana region have already halted the shipments of a pilot program to test early production and deliver oil from Lokichar to the port of Mombasa about 1,000 kilometers (640 miles) away, for future export. Tullow, along with partners Africa Oil Corp. and Total SA, plans to make a final investment decision next year to ramp up production by 2021 and develop a pipeline to ultimately transport the estimated 560-million-barrel resource.


Tullow has enough supplies to run its Kapese Integrated Operation Base for another 14 days, “after which we will have no option other than a complete shut-down of the camp,” the company said in an emailed statement. “This will further delay resumption of crude oil trucking by about two months.”



Kenya’s recent celebration of the first oil shipments, a milestone since Tullow’s discoveries in 2012, has been short lived. Aggrieved local community members seized trucks transporting crude on June 28 and broke into Tullow’s Ngamia 8 oil well and storage site, protesting rampant insecurity in Turkana county. Lawmakers have linked the protests to local residents having their share of oil revenue halved to 5 percent by the government and demands for jobs and business opportunities such as supply tenders.

Revenue Sharing

The companies and both local and national governments need to resolve the issue of equitable distribution of revenue from the oil or they may face more public discontent, according to Ahmed Salim, an analyst with Teneo Intelligence.

“Until they get that right, this is going to be something that’s going to disrupt Turkana and it’s going to disrupt Tullow Oil for the foreseeable future,” he said in an interview.

Tullow encountered protests as early as 2013 in Kenya over a demand for jobs and benefits when the company was on an ongoing drilling schedule. Exploration director Angus McCoss at the time said the action was a “good wake-up call” to be more aware of local needs. The National Bureau of Statistics ranks Turkana as the poorest of Kenya’s 47 counties.

Government Intervention
The government is working with the community to resolve the impasse, Petroleum Principal Secretary Andrew Kamau said by phone from the capital, Nairobi. He declined to give any estimate for how long that would take.

The local community wants to decide how to spend their 5 percent share of oil revenue, James Lomenen, a lawmaker for Turkana South, said in an interview. “Their argument is that you can’t build infrastructure where people are struggling to meet daily basic needs; it would be of no use,” he said. “These are people who can’t even afford a meal.”

From miners to oil explorers, com¼panies need to maintain strong ties with both the national government and local communities, Salim said. “Once things get moving, I think the shift in focus will go back to the fact that oil and gas is a very profitable business and Turkana is one of the poorest counties in the country.”

Tullow shares fell as much as 1.8 percent before trading unchanged at 218.2 pence at 8:27 a.m. in London.

(Updates with share-price drop in final paragraph.)

Terms of Service Violation

Irish »
Protests threat to Tullow Oil in Kenya

• Duncan Miriri

July 18 2018 2:30 AM

Tullow Oil said yesterday that it might be forced to shut down operations at its northern Kenyan oilfields if it cannot reach a deal to end protests by the local community that have disrupted activities to truck oil from the area.
The protests, which began on June 27, interrupted a trucking scheme that aims to transport about 2,000 barrels per day (bpd) of crude oil from northern oil fields to the coast. The pilot scheme was launched in June.


The oil is being used to test flow rates and other technical issues before the start of full production and before Kenya starts oil exports via a pipeline to the coast. The pipeline is due to be constructed by 2022.

The production area in the Turkana region has long been plagued by banditry and cattle rustling. The protesters are demanding the deployment of more security forces in the area, Kenyan media has said.


"It is vital that our return to work in Kenya has the backing and support of the government, Turkana leadership and the community. We are working hard on reaching an agreement that will make sure that our operations will not be interrupted in the future," said Martin Mbogo, Tullow Kenya Managing Director.

"Discussions are ongoing and we are optimistic that we will be able to start crude oil trucking again soon," Mbogo said.


But he added that essential supplies needed to run production "will run out in the next 14 days after which we will have no option other than a complete shutdown of the camp".

The company said this month it had reduced its staff at the site due to the unrest in the area that had interrupted operations. (Reuters)

Irish Independent

Protests threat to Tullow Oil in Kenya - Independent.ie

Tullow may stop Turkana oil trucking over unrest

Jul. 18, 2018, 12:30 am
By REUTERS

Tullow Oil country managing director Martin Mbogo during the Tullow Oil media briefing in Nairobi on October7,2016.PHOTO/ENOS TECHE.
Britain’s Tullow Oil yesterday said it might be forced to shut down operations at its northern Kenyan oilfields if it cannot reach a deal

to end protests.

The blockade by the local community has disrupted activities of trucking oil.

The protests, which began on June 27, interrupted a trucking scheme that aims to transport about 2,000 barrels per day of crude from the fields to the Coast. The pilot scheme was launched in June.

The oil is being used to test flow rates and other technical issues before the firm starts full production and before Kenya starts oil exports via a pipeline to the Coast. The pipeline is due to be constructed by 2022.

The production area in Turkana region has long been plagued by banditry and cattle rustling. Turkana also lies near South Sudan, a nation torn by years of conflict.

“It is vital that our return to work in Kenya has the backing and support of the government, Turkana leadership and the community. We are working hard on reaching an agreement that will make sure that our operations will not be interrupted in the future,” Tullow Kenya managing director Martin Mbogo said.

“Discussions are ongoing, and we are optimistic we will be able to start crude oil trucking again soon.”

However, he said essential supplies needed to run production would run out in the next 14 days, after which we will have no option other than a complete shutdown of the camp.

The company said it had reduced its staff at the site due to unrest that had interrupted operations.

When asked about Tullow’s statement, officials at the Ministry of Petroleum and Mining did not comment.The protesters are demanding the deployment of more security forces, the Kenyan media has said.

Tullow has said the Amosing and Ngamia onshore fields have estimated contingent resources of about 560 million barrels, with plateau production potentially reaching 100,000 barrels per day.

Tullow may stop Turkana oil trucking over unrest

MY TAKE
Kenya government will have to resort to external loan to finance 2018/2019 budget as half of the $ 30 bln counted on oil export money.

Seems the GoK budget is not realistic. How can they account for the source of revenue which is not well established.