Tullow Folds Up Early Oil Pilot Scheme as Contract Expires

British Oil Explorer Tullow together with its Joint Venture Partners, Total and Africa Oil on Tuesday confirmed the end of the Early Oil Pilot Scheme (EOPS) following the expiry of the contract which run for two years.

The listed company says EOPS has served its purpose as a pilot project by providing critical technical data, logistical and operational experience as well as training that will materially assist the National and County Governments and the Joint Venture Partners on the journey towards Full Field Development (FFD) program for Kenya’s petrodollar dream.

“The EOPS has provided important lessons for the planning and execution of the Full Field The development phase of Project Oil Kenya,” Tullow Oil COO Mark MacFarlane said in a statement.

“By producing, transporting, storing, and exporting crude oil from Northern Kenya, the pilot scheme has provided proof of concept for oil production in Kenya. The first export of crude oil from East Africa in 2019 was a historic achievement and clearly demonstrated the potential of Project Oil Kenya on world markets,” he added.

With Tullow playing the focal role, the EOPS was an eventful journey that involved the British company facilitating the sale of 240,000 barrels worth of Kenya’s crude oil to London based ChemChina UK Limited for Ksh1.2 billion ($12 million) in August 2019.

In May 2020, the company declared Force Majeure on its main licenses in Kenya, informing the government of its inability to honour its contracts and also as a means to navigate tax issues.

“Tullow and its partners have called Force Majeure because of the effect of restrictions caused by the coronavirus pandemic on Tullow’s work program and recent tax changes. Calling Force Majeure will allow time for the Joint Venture and Government to discuss the best way forward,” Tullow said on Monday.

Force Majeure is a contract clause or provision that allows an individual or organisation cite unforeseeable circumstances as a reason for failing to honour obligation.

The company has also come under the microscope with critics questioning the viability of the Kenyan oil project but the company has always maintained that the project is worth the investment.

“The annual results show that there is enough oil in Kenya and the business fundamentals remain intact with recent independent reserves audits demonstrating that Kenya has a substantial underlying reserves and resources base in East Africa. Throughout 2019, over 95% of the Tullow’s reserves and resources have been independently audited, and the results underpin the quality of the asset base,” Tullow Executive Chair Dorothy Thompson said.

In January, the company suspended trucking of Crude Oil from Turkana lamenting severe damages to roads caused by harsh weather conditions experienced between October and December 2019.

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