Representatives from two Indian state-backed oil companies – ONGC Videsh and Indian Oil Corporation – recently met with Tullow Oil, which seeks to bring on board a strategic partner to lead its Kenyan oil fields to full-scale commercial production.
London-based Tullow announced in a Twitter post that the Kenyan Ministry of Petroleum and Mining hosted a meeting in Nairobi with Tullow, ONGC Videsh and Indian Oil as part of Tullow’s ongoing process to secure an investor for its Kenya oil project. “The meeting was positive and the parties agreed to hold further discussions,” Tullow noted.
The British oil company first discovered crude in the South Lokichar Basin of Kenya’s northern Turkana region in 2012. Tullow owns 50% of the joint venture (JV) and Canada-based Africa Oil and Total Energies each have a 25% share. The fields hold an estimated 585m barrels of oil. The JV partners estimate the venture will have a daily output of 120,000 barrels at a cost of US$22 per barrel.
A final investment decision – which includes processing facilities and an 825km pipeline from Lokichar to the port of Lamu – will reportedly be made only once a strategic partner has been secured.
Kenya’s ambition to become a crude exporter has faced significant hurdles, including disputes with local communities about compensation and land issues; difficulties in securing an export route from the remote Turkana region; and Covid-19-related delays. In 2021, the JV partners redesigned the project to make it more technically, commercially and environmentally robust. A final field development plan was submitted to the Kenyan government in December.
In a March 2022 statement to shareholders, Tullow CEO Rahul Dhir said the company is working with potential partners to reduce its stake to be more in line with a company of its size. Each of the JV partners is expected to cede shareholding as part of a deal that could cost the new partners between US$2bn and US$3bn.
Indian Oil Corporation is the country’s biggest crude oil refiner while ONGC Videsh – the overseas arm of Oil and Natural Gas Corporation – is involved in the exploration, development and production of oil and gas outside India.
India seeks to acquire equity interests in international oil assets through its state-backed oil companies to bolster energy security. The government recently gave the green light to state-run Bharat PetroResources to invest an additional US$1.6bn in the BM-SEAL-11 project in Brazil.
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