Lower oil prices forces Tullow to redesign Turkana project
British oil firm Tullow, is reviewing its operations in Turkana to meet current realities in the global oil market.
Speaking yesterday at the firm's Capital Markets Day, chief executive officer Rahul Dhir said the company 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 for Kenya development.
The drop in global oil prices to the current $45per barrel has necessitated the fundamental need to redesign the development in order to deliver an economic project at a 'lower for longer' oil price world.
''We have discovered over 1.5 billion barrels of oil in place and are shallow, productive reservoirs with light oil. This is very large, but the original development plan was meant to work at oil prices of at least $50 per barrel.
This has seen Tullow and its JV partners re-evaluate the development, which is planned to be a phased development concept.
According to the oil firm, the main areas that will improve the project economics will be to optimise the reservoir performance to deliver a higher initial production rate (upwards of the current 72bopd) by drilling at the most productive part of the fields in the earlier phase.
This, it said, along with the optimisation of the capital costs and life cycle operating spend, will have the potential to accelerate more resources within the license period.
“On Kenya development, we are confident, particularly in light of the license extension discussion, allows us the time to complete the redesign work,'' Dhir said.
He added that Tullow is working with the Kenyan Government in seeking the much-needed fiscal package, as per the agreed Heads of Terms (HoT’s), to deliver an investable project and an FDP by the end of 2021.
''The engineering work and tendering that has been done gives us a good sense of the market and costs; and with Early Oil Pilot Scheme (EOPS) now complete, we have production data that improves our understating of the reservoir in the South Lokichar basin,'' Dhir said.
He said that other critical areas such as land, water, ESIA approvals and commercial agreements required to implement the fiscal package to support the development are being progressed with GoK.
''Tullow, as stated in the past, will continue to look at opportunities to farm down the project so that it can have the right level of an equity position for Kenyan development,'' the CEO said.
Kenya extended Tullow's license for Blocks 10BB and 13T in the South Lokichar basin, near Lake Turkana
The extension was granted after partners lifted a notice of force majeure on the blocks August 21.

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