Tullow troubles will not affect Turkana oil, says PS
The Ministry of Energy says Kenya’s oil production will go on as planned despite trouble at Tullow Oil which is facing credibility concerns on past guidance to investors on its financial health and a management board coup.
Tullow’s board ouster of chief executive Paul McDade and his head of exploration Angus McCoss saw shares tumble by up to 70 per cent. The board said it was uncomfortable with the way the duo run the firm.
Seeking clarification on the significance of the storm brewing within the firm, Petroleum Principle secretary Andrew Kamau told Business Hub on phone that Kenyan operations were intact.
“Tullow has been having many of these challenges. We expect that they will affect Ghana but not Kenya,” he said.
The Africa-focused oil producer had scrapped its dividend after failing to meet production targets on weak performance by flagship assets in Ghana amid technical hicups in completing a well at offshore fields.
In recent months, Tullow faced several setbacks in Uganda and Kenya where it is yet to reach final investment decisions for oil projects.
“Production performance has been significantly below expectations from the group’s main producing assets, the TEN and Jubilee fields in Ghana,” said the firm in a statement.
Kenya was to sign the critical Final Investment Decision (FID) with Tullow Oil and its partners by 2020, without which financiers cannot commit to fund drilling, pipeline and other projects needed to exploit the oil.
Kamau was in London in October where they signed an agreement with the oil multinational that will attract up to Sh308.4 billion financing of its Turkana petroleum deposits.
It is not clear how the new developments will affect the final investment decision of the project financiers, especially if the company is sold.
Tullow had earlier announced that it would give the final go-ahead by the end of 2019 for full field development at the Turkana oilfields, with a pipeline and other export infrastructure expected to be ready by 2022.
The firm’s temporal chair Dorothy Thomson said “material errors were made in the running of the business and that the company could be sold for the right price.”
Tullows management said it expects production to drop by almost a third lower than forecasted and also suspended its dividend.
Thomson said the London-listed firm has embarked on a thorough review of the business, adding that selling the company at the “right price” was among the options.
Kenya’s Lokichar project has already experienced different challenges that have resulted in pushing forward of the date for first oil from 2022 to 2024.