Kenya, November 8,2017 – Tullow Oil plc (Tullow) is expecting to commence Kenya’s Early Oil Pilot Scheme in early 2018, the company has announced, after the project failed to kick off this year.
This involves transportation of crude oil by road from Turkana oil fields to Mombasa in readiness for export.
The company has also said it remains committed on the planned construction of the Uganda-Tanzania oil pipeline.
“In Kenya, the current phase of exploration and appraisal drilling in the South Lokichar basin has been concluded and the focus is now on the Early Oil Pilot Scheme (EOPS) and the development of the discovered resources,” Tullow said in its November trading update on Wednesday.
Successful exploration wells drilled in the programme were the Erut-1 well that tested and proved the northern extent of the basin, and the Emekuya-1 well that further de-risked the Greater Etom structure and the northern area of the basin, the firm reported.
“The two remaining exploration wells drilled included the Etiir-1 well, which although dry, helped to understand the westerly extent of the Greater Etom Structure, and the Ekales-3 well which tested an undrilled fault block adjacent to the Ekales field,” Tullow said.
Appraisal drilling has also been a key focus of the programme in 2017.
Appraisal wells were drilled at Ngamia-10 and 11, Amosing-6 and 7 and Etom-3 and all the wells have improved the definition of the limits of their respective fields.
The final well in the programme was the Amosing-7 appraisal well and the Marriott-46 rig which has now been demobilised.
“Activity will now move to focus on collecting further dynamic data from the fields,” the firm said.
As part of the EOPS extended production, water injection testing and a water flood pilot test utilising the Ngamia-11 well are planned for the first half of 2018.
“Produced oil will initially be stored, until all work is completed and necessary consents and approvals granted for the transfer of crude oil to Mombasa by road,” the company said.
Tullow said it is now reviewing all the data from the South Lokichar basin, and intends to give its assessment of contingent resources and plans for developing the basin in the first quarter of 2018.
The firm said it also remains keen on the planned construction of Kenya’s oil pipeline, intended to connect the oil field to the port of Lamu.
A Joint Development Agreement (JDA), setting out a structure for the government of Kenya and the Kenya Joint Venture Partners (Tullow Oil, Africa Oil and Maersk Oil) to progress the development of an export pipeline, was signed on October 25, 2017.
The joint development agreement (JDA), which provides a legal framework on the proposed 820 kilometres crude oil pipeline development, will be followed by studies on the pipeline’s technical requirements as well as its financing and ownership structure.
Upstream Front-End Engineering Design (FEED) and Environmental and Social Impact Assessments (ESIA) are expected to commence in the first quarter of 2018.
The Kenyan government suspended the Early Oil Pilot Scheme in June this year, citing delays in passing of the Petroleum (Exploration, Development and Production) Bill by Sanate.
Energy Cabinet Secretary Charles Keter said the Bill will guide among other issues, the sharing of oil revenues by the national government, county and the local community.
The project was further affected by the August general elections and had to be pushed forward.
The government had set a June 30 deadline for the first batch of oil to leave the oil fields.
Tullow has extracted about 40,000 barrels which are stored at its Turkana fields, ready for transport to Mombasa.
In Uganda, two ceremonies are planned for this month where a cross-border stone will be laid at the Uganda-Tanzania border and a foundation stone will be laid in Hoima, Uganda, for the pipeline project between the two states.
President Yoweri Museveni (Uganda) and his Tanzanian counterpart- President John Magufuli, laid a foundation stone at the Tanga Port in Tanzania in August, showing their commitment to the pipeline project.
“Discussions on the pipeline project continue with both governments supporting progress on the key commercial and transportation agreements,” Tullow said.
Tullow Oil PLC Cheif Executive Officer Paul McDade said: “In East Africa, both our projects are making steady progress towards Final Investment Decisions with our Kenyan business beginning the important shift from exploration and appraisal to development.”
“With financial discipline and efficiency embedded across the group, and with market conditions showing some early signs of improving, Tullow is well placed to benefit both from targeted investment in our diverse, low-cost portfolio and the opportunities that this point in the cycle presents,” he added.
By Martin Mwita