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Tullow Oil welcomes exploration deal with Kenyan government

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British oil exploration company, Tullow Oil has welcomed Tuesday’s agreement with the Kenyan government that gave three exploration companies the rights to develop oil fields in Lokichar, Turkana County.

In its Trading and Operational Update 2019, Tullow chief executive Paul McDade described the agreements as a material and encouraging step forward which gives all parties confidence that the development project will ‘be robust at low oil prices’.

“The completion of the FEED (Front End Engineering Design) studies for both the upstream and midstream, together with recent market soundings provide increased confidence in the project’s capital expenditure estimate and construction timetable that is expected to see first oil three years after the Final Investment Decision (FID),” says McDade.

According to the chief executive, the Kenyan government has made significant progress, both in acquiring the land for the upstream and pipeline and securing water rights for the upstream.

He however lamented that the procedures are taking longer than initially anticipated.

The National Environment Management Agency (NEMA) has requested that additional community consultation take place for the Environmental and Social Impact Assessments (ESIAs) which will now be submitted in the second half of 2019, a further delay to the project.

{Read: Tullow Oil says final investment decision this year remains ambitious target}

“All parties continue to work well together across all development workstreams and significant progress has been made so far this year. However, despite this progress, the Partners and the Government of Kenya are reviewing the most likely timeline to FID which Tullow now expects in 2020,” added McDade.

The deals signed by Petroleum and Mining Cabinet Secretary John Munyes on Tuesday gave Tullow, Total and Africa Oil the green light to develop a 60,000-80,000 barrels per day crude processing facility for oil discovered in blocks 10 BB and 13T in South Lokichar Basin.

{See also: Tullow says Kenyan oil well received in market}

“The deals we have signed today are for the discovery of oil fields in South Lokichar basin. The parties have agreed that Amosing, Ngamia and Twiga fields should be developed to the foundation stage of development to the stage of 60,000-80,000 barrels per day,” said Munyes.

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