Toward Kenya’s oil future: Time to start considering our options
Kenya has already celebrated many milestones on the journey to discovering oil and earlier last week, Tullow Oil and its partner, Africa Oil Corp, announced another major oil discovery at the Etuko 1 exploration well in the South Lokichar Basin, Turkana County.
This is the third major success that we have had in this basin after the Ngamia 1 and the Twiga South 1 discoveries which were tested earlier this year. Having drilled five wells in Kenya in 2012 and 2013, including one well offshore, we are still at the early stages of our exploration programme and there are many more wells to be drilled over the coming years.
There is a very important difference between a declaration of commerciality and having discovered sufficient amounts of resources to inform early thinking about how Kenya’s oil resources might be used.
Tullow Oil has not issued a declaration of commerciality. A declaration of commerciality is a critical step in the life-cycle of oil and gas development and it is unlikely that any formal declaration will be made until many more wells have been drilled and there is a better understanding of the region’s full potential.
In short, we need to get a much fuller picture of the volume of oil reserves before we can formally declare commerciality.
We, however, believe that the combined average of the resources discovered to date (around 300 million barrels) mean that Kenya can graduate to begin conducting studies for a potential development towards commercialisation.
While we are still years away from realising first oil, having discovered more than 300 million barrels to date, we can start to consider how these important oil resources might be developed to support Kenya’s growing economy and deliver real benefits to neighbouring communities and the country as a whole.
Options
Together with the Government of Kenya, Tullow and our partners will be looking at several development options which may include delivering oil to large industrial users, refining and also exporting oil to high value international markets through a pipeline.
Once we have consulted our stakeholders and an appropriate and economically viable plan for development has been agreed, we will turn our attention to ensuring the right infrastructure is in place to support any initial oil production. It is only then that Kenya can start to reap the benefits of early revenue. However, this is no mean task and the challenges ahead are great.
Establishing an economically viable development is dependent on a big range of factors including the amount of oil which can be feasibly recovered, the infrastructure requirements to bring oil to market and obviously the oil price which is an essential factor in determining project viability.
We are also operating in a very environmentally, socially and culturally sensitive area and we have to make sure that any future development plans account for the highest standards of social performance, health, safety and environmental management.
Furthermore, we are well aware that all this cannot be done singlehandedly and we are fully committed to working with the government, the communities in which we operate, and other stakeholders to realise the full potential of Kenya’s resources.
We continue to make real and tangible progress on our exploration and appraisal activities and now, just 16 months since our first major discovery at Ngamia 1, we can start to consider the development possibilities which will deliver the nation’s oil to market.
Martin Mbogo is the Country Manager, Tullow Oil Kenya
AI
