British explorer Tullow plans to spend up to Sh17.6 billion in the Turkana petroleum fields this year as it moves ahead with plans for the early oil export plan.
The firm said in a trading statement yesterday that its focus this year will be on the Early Oil Pilot Scheme (EOPS) that the government hopes to use to test the waters in the international oil markets ahead of full scale production in a few years’ time.
Tullow said that the recent phase of exploration and appraisal drilling in the South Lokichar Basin has now been concluded, with the firm reopening engagements with the government on the approach and timelines for full production now that the elections period has ended.
“Kenya’s pre-development expenditure is expected to be about $80 million (Sh8.3 billion) and exploration and appraisal spend about $90 million (Sh9.3 billion),” said Tullow in the statement issued yesterday ahead of the release of full year financial results next month.
“Work is already under way on the EOPS, with initial injectivity testing commencing on Ngamia-11 and oil production and water injection facilities being constructed in the field ready to commence production/injection in the first quarter of 2018.”
The capital expenditure on Kenya will account for 37 per cent of the total of $570 million (Sh59 billion) the company will put into its Africa operations, although it expects to claw back some Sh11.4 billion ($110 million) from payments on sale of oil blocks in Uganda.
Tullow announced in November that it had raised Sh258 billion ($2.5 billion) in new loans to help fund its Africa’s operations in 2018.
The firm is yet to announce its total spend on the Kenya operations in 2017 — with the numbers expected next month — but it had estimated that by mid-2016, its cumulative spending in the country had surpassed Sh150 billion.
Oil explorers around the world are reviving their activity as price of crude in the international markets continues to climb, touching a three year high of $69 per barrel this week.