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Kenya’s Dreams Of being Wealthy From Crude Oil Reserves In Turkana Stay Unfulfilled As Investors Are Yet To be Found

SK 2 years ago 2 min read

Kenya’s hopes of becoming wealthy from its crude oil reserves in Turkana remain unfulfilled because project explorer Tullow Oil has not yet brought on board a strategic investor.

Although the company expressed hope about achieving progress by the end of the year in its recently released half-year results, Tullow has underlined obstacles to the realization of the project’s value in use (VIU).

The acceptance and completion of an acceptable offer from a strategic partner and obtaining required government permissions are two factors that put Tullow’s ability to realize the expected VIU in jeopardy.

Tullow also listed the project’s funding and government deliverables as additional concerns.

“These items require satisfactory resolution before the Group can take a final investment decision,” Tullow said on Wednesday.

“Due to the binary nature of these uncertainties, the Group was unable to either adjust the cash flows or discount rates appropriately.”

As a result, Tullow’s assets in Kenya have not experienced any impairment or reverse impairment.

The company claims that since the beginning of the year, it has been in talks with the government about getting its Final Development Plan (FDP) approved and ensuring government deliverables.

The Kenyan government has extended the review process for the FDP till November 6, 2022.

“In addition, the company continues to progress with the farm down process with approvals being sought,” added Tullow.

Tullow is nevertheless hopeful of progress on the Kenya oil project under the new administration despite the non-change in uncertainties in the last six months.

“A process to secure a strategic partner for the development project in Kenya is ongoing and Tullow is confident that substantial progress will be made before the end of the year. Following the recent elections, Tullow and its joint venture partners will work with the new government to progress the project which has the potential to make a significant contribution to the Kenyan economy through taxation, revenue sharing, employment and local content,” Tullow said…