Kiraitu Murungi, who previously served as energy minister, urged President William Ruto to increase investment in hydrocarbon production to solve the country’s debt crisis, state-owned Kenya Broadcasting Corp reported.

He said Kenya will earn at least USD 8 billion from the Lokichar Basin alone, which will be enough to significantly reduce borrowing.

The Lokichar field asset is valued at 472 million barrels recoverable, the report said.

Last month, London-headquartered Tullow Oil announced it would take full control of Project Oil Kenya Development after two joint venture partners, Africa Oil Corp and Total Energies, pulled out of blocks 10BB, 13T and 10BA in the South Lokichar Basin.

Tullow Kenya BV Managing Director Madhan Srinivasan said, “Project Oil Kenya is a low-cost development project that has the potential to unlock material value.”

Tullow Oil is a multinational oil and gas exploration company based in Tullow, Ireland and headquartered in London, United Kingdom.

In 2006, the Company began drilling its first well in Uganda and began exploring the Lake Albert region.

In 2007, Tullow drilled two deep water wells off the coast of Ghana and discovered the massive Jubilee oil field.

In December 2015, Tullow submitted a draft field development plan to the Kenyan government to develop nine fields in the South Lokichar Basin.

Crude oil production from the South Lokichar Basin is expected to be between 60,000 barrels per day to 100,000 per day.

Currently, Kenya does not produce any hydrocarbons, although the country most likely has the potential to become an oil producer after 2030.

Several commercial oil discoveries have been made in Kenya in recent years, but the country is facing obstacles that have caused production delays.

Negotiations for a joint export pipeline route with neighbouring Uganda are underway, while persistently low oil prices have slowed exploration drilling in Kenya.

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This could be one of the key functions that the company could lose control over if the proposals by the petroleum ministry come through. It is reported that regulation and market forces has put the National Oil Corporation of Kenya in a difficult spot over the years. 

This year is big for Kenya as it marks nine years since its announcement on the oil discovery in Turkana. It was in March when the country announced that sweet oil was discovered in Turkana, pointing to the fact that the country’s oil deposits were likely to be more than Uganda’s. 

In December, Tullow Oil chief executive officer Rahul Dhir said in a statement, “In Kenya, Tullow is in the process of re-assessing Project Oil Kenya to design an economic project at low oil prices whilst preserving the phased development concept.” 

With the pandemic, the steep drop in oil prices have impacted investor confidence to phase the next phase of the Tullow Oil project that used up more than Sh200 billion between 2012 and 2018 alone.

“In parallel, over the coming months, the Joint Venture partners will work closely with the Government of Kenya on land and water agreements, gaining approval of the Environmental and Social Impact Assessments and finalising the commercial framework for the project. The successful completion of this work will enable the submission of Field Development Plans to the Government of Kenya,” he said in the statement.

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The consignment was sold through a bidding process in which ChemChina had outbid seven other companies from Europe and Asia. While the government set the price at $43 per barrel, it fetched around $60 per barrel.

“So, I think we have started the journey and it is up to us to ensure that those resources are put to the best use to make our country both prosperous and to ensure we eliminate poverty,” President Uhuru Kenyatta told the media.

Currently, London-based multinational oil and gas exploration company Tullow Oil has exploration rights for oil in Kenya. According to the company, the oilfields in Turkana, Kenya hold around 560 million barrels of oil.

President Uhuru Kenyatta believes Kenya’s oil export will contribute heavily to the country’s economic development.

Last year, President Uhuru Kenyatta launched the Early Oil Pilot Scheme (EOPS) for the exploration and development of its oilfields in Turkana. The scheme is also an important step towards the South Lokichar Full Field Development (FFD) project.

Both the Kenyan Government and Tullow Oil have emphasized the fact that the Early Oil Pilot Scheme is not a commercial project. Rather, its purpose is to identify the problems and difficulties that might occur when the project reaches its commercial phase.

To reach the commercial phase, it would take approximately four years and Kenya will start making profits from its oilfields only from 2024.

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