Kenya is positioning itself for a long-awaited entry into the ranks of oil-producing nations after securing a new investor and approving a revised development blueprint for the South Lokichar oil fields, a project expected to attract more than Sh1.7 trillion in investment and operating expenditure over its lifetime.
Energy and Petroleum Cabinet Secretary Opiyo Wandayi says the country has finally moved beyond years of uncertainty that stalled efforts to commercialise oil discovered in Turkana more than a decade ago.
The renewed optimism follows the approval of a revised Field Development Plan (FDP) and the entry of Gulf Energy E&P BV, which has taken over the project following the exit of previous investors.
“We have moved from endless discussions about potential to an actual development pathway,” Wandayi said.
Oil was first discovered in Turkana in March 2012 when Tullow Oil and its partners struck crude at the Ngamia-1 well, a breakthrough that generated expectations that Kenya could become East Africa’s next oil producer.
Further exploration led to discoveries at Ngamia, Ekales, Amosing, Twiga, Etuko, Agete, Ewoi, Etom, Ekunyuk and Erut, establishing the South Lokichar Basin as one of the country’s most significant petroleum assets.
Current estimates place oil in place at approximately 2.85 billion barrels, with recoverable resources standing at about 429 million barrels over the life of the project.
Despite the promising resource base, commercial production remained out of reach for years as global investment patterns shifted and financiers became increasingly cautious about long-term fossil fuel projects amid the global energy transition.
The project suffered a major setback in 2023 when Tullow Oil’s partners, Africa Oil and TotalEnergies, withdrew from the venture, raising concerns about its future.
According to Wandayi, efforts to attract another major international investor failed as funding conditions for upstream petroleum projects became increasingly difficult.
“Attempts to bring in another strategic international investor were not successful. The global financing environment had changed and many traditional oil investors were pulling back from frontier projects,” he said.
The government’s strategy shifted when Gulf Energy agreed to acquire Tullow Kenya’s interests and pursue development through a phased investment model.
“It is a major investment. Tullow Oil was unable to proceed because of the huge capital requirements involved. We have now taken a new route, and we are pleased that Gulf Energy acquired Tullow Oil’s interests,” Wandayi said.
The Cabinet Secretary described the transaction as a turning point for Kenya’s petroleum ambitions.
“This was the turning point,” Wandayi said. “The entry of Gulf Energy provided a practical solution to a problem that had persisted for years. It gave us a credible investor willing to take the project forward and unlock Kenya’s upstream petroleum potential.”
After taking over the project, Gulf Energy submitted a revised Field Development Plan in September 2025. The plan was reviewed by the Energy and Petroleum Regulatory Authority before receiving ministerial approval in November and subsequent ratification by Parliament.
“I am the first Cabinet Secretary to approve the Field Development Plan for the Turkana oil project, as required by law, and Parliament has already ratified it. We are now at a different stage as we prepare for full commercial production,” Wandayi said.
The government now expects Kenya’s first commercial crude oil exports before the end of 2026.
“We are confident that oil will start flowing before the end of this year. We have put adequate measures in place and, if all stakeholders work together, Kenya will soon begin exporting crude oil,” he said.
The development strategy approved by the government adopts a phased production model beginning with output of up to 20,000 barrels per day before gradually increasing to 50,000 barrels daily by 2032.
Officials believe the phased approach lowers investment risk by spreading infrastructure development over time while allowing early revenues to support subsequent expansion.
The economics of the project are substantial.
Government estimates show capital expenditure will exceed $5 billion (Sh646 billion), while operating expenditure over the project’s projected 25-year lifespan is expected to reach approximately $8 billion (Sh1.03 trillion).
Combined, the project could inject nearly Sh1.7 trillion into the economy through direct investment, procurement, logistics, transport and support services.
“The operating expenditure alone represents a huge opportunity for Kenyan businesses. These are resources that will circulate through the economy and create jobs for our people,” Wandayi said.
Authorities estimate the project could create more than 3,000 direct, indirect and induced jobs during development and production.
Beyond employment, officials anticipate spillover effects across transport, logistics, retail and hospitality sectors, particularly in northern Kenya where infrastructure investment is expected to accelerate.
“When major infrastructure moves into an area, it changes the economic landscape. Roads improve, businesses emerge and opportunities increase,” Wandayi said.
The government’s confidence in the project’s commercial prospects has also been informed by lessons from the Early Oil Pilot Scheme conducted between 2018 and 2022.
During the pilot phase, Kenya exported 414,777 barrels of crude oil from Turkana to Mombasa using a fleet of 100 trucks, generating approximately Sh3.7 billion in revenue.
The exercise provided operational data on transportation, storage and export logistics while helping establish pricing benchmarks for Kenyan crude.
“It gave us proof that the resource is marketable. It also provided practical lessons on transportation, storage and export logistics,” Wandayi said.
Although the pilot generated about $28.3 million (Sh3.7 billion), costs exceeded revenues, resulting in a deficit that was incorporated into recoverable project costs.
To improve the project’s attractiveness to financiers, the government approved fiscal adjustments, including raising the cost recovery ceiling to 85 per cent for both production blocks.
Wandayi defended the decision as necessary to make the project commercially viable.
“We had to strike a balance between national interests and commercial realities. Without a bankable framework, the project would remain stuck on paper,” he said.
Environmental safeguards have also been incorporated into the approved development framework, including environmental impact assessments, biodiversity protection programmes, community protection measures and a zero-flaring policy.
“Environmental stewardship is not optional. It is embedded in the development plan and forms part of the approval conditions,” Wandayi said.
However, the Cabinet Secretary cautioned that the commencement of oil production should not be interpreted as an immediate solution to high fuel prices.
Kenya currently lacks refining capacity and will continue importing refined petroleum products even after commercial production begins.
“At the moment, we do not have a refinery, but we hope to have one in the future so that we can process our own crude locally,” he said.
Instead, government officials expect the broader benefits to come through increased revenue collection, foreign exchange earnings, investment inflows and the development of a new industrial sector.
“The value of this project extends beyond fuel prices. It is about creating a new economic sector, attracting investment and generating revenue that can support development,” Wandayi said.
After 14 years of delays, changing investor sentiment and repeated doubts about the viability of the project, Kenya’s petroleum sector now faces perhaps its most critical test yet: translating geological discoveries into sustained economic returns.
“The discovery happened in 2012. Many people doubted whether we would ever get to this stage,” Wandayi said. “Today, we have an approved development plan, an investor committed to production and a clear pathway to the first oil.”
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