25 June 2019

Kenya Signs Deal to Develop More Oilfields in South Lokichar Basin

Nairobi — The Kenyan government has signed Head of Terms for the development of oilfields in the South Lokichar basin; a deal inked with Tullow Oil, Total and Africa Oil who are Joint Venture partners.

The agreements are for the discoveries of oilfields in block 10BB and 13T specifically in the Amosing, Ngamia and Twiga fields. As per the deal, the fields should be developed to the foundation stage with a 60,000-80,000 barrel production per day with a central processing facility and an export pipeline to Lamu.

Speaking during the signing ceremony, Petroleum and Mining Cabinet Secretary John Munyes termed the agreements as being in the interest of Kenya.

"Head of terms define our project by drawing out the resources that will be developed within the agreement, the obligation of each parties and they also define physical incentives such as the development of the crude oil pipeline from Lokichar to Lamu," Munyes said.

The Ministry has embarked on negotiations to securing land and the water needed for the project and they are in consultation with 7 county governments. It is expected that by 2022, the pipeline from Lokichar to Lamu will deliver 60,000-80,000 barrels of oil per day.

The project is estimated to cost US$3 billion and will be the largest single private investment in Kenya.

"What we have signed today with the heads of terms give us the capability to go to our financiers to get the funding we need to allow us to invest in the pipeline and move forward in sanctioning the project. We have the absolute fiscal certainty and we need to make sure that this project will make money for the Government of Kenya and for the international contractors at the current oil price uncertainty and low oil prices globally," said Tullow Oil's Executive Vice President Mark Macfarlane.

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