Tullow Oil may sell stake in Kenya fields

British oil and gas firm Tullow Oil Plc may consider selling part of its exploration interest in Kenya.

A report by Citi Bank says that the proceeds of the sale would be used to run Tullow as crude prices continue to pick from a historic six-year low.

Tullow could also raise its borrowing to $4.35 billion until 2017, from $3.1 billion at the end of last year, to finance the firm’s investment, the research adds.

Tullow may also sell its interests in Uganda over the next 12-18 months, Citi notes.

The firm announced two months ago that it would focus on oil production in West Africa to generate cash for its business following the plunge in global crude prices.

DIFFICULT YEAR

Tullow chief executive Aidan Heavey said in a statement: “2014 was a difficult year for our industry and a challenging one for Tullow as our results demonstrate. In response to this and the fall in the oil price, we have reset our business and are focusing our capital expenditure on high-quality, low-cost oil production in West Africa.”

The statement accompanied the firm’s full year results.

Delivery of oil exports from Kenya and Uganda, where Tullow, together with its partners has discovered commercially viable crude deposits, is expected to significantly boost the company’s oil output capacity.

Citi expects the first production of oil in Kenya in 2020 and 2021 for Uganda, later than the current plans by the government and the oil companies involved.

FEASIBILTY STUDY

Kenya expects oil production in 2018, subject to construction of a crude oil pipeline between Hoima in Uganda and the proposed port at Lamu, through Lokichar where most of the oil deposits are.
Last November, the two governments appointed Toyota Tsusho Engineering Corporation to carry out a feasibility study and engineering design for the pipeline.