Tullow has announced it has reached an agreement with the Government of Kenya to extend the exploration period for Blocks 10BB and 13T in South Lokichar to 18 September 2020 with the earlier extension set to expire in July and September 2017.
This announcement comes as the company expects to restart drilling activities in the South Lokichar basin in the fourth quarter of 2016 with Etete and Erut prospects in the Etom Complex first on the line.
These are two of the four wells expected to be drilled in the South Lokichar basin starting Q4 and the potential to extend this by a further four wells. Other potential prospects in the programme include further appraisal of the Ngamia and Amosing fields to target un-drilled volumes, with an aim of extending the size of these existing discoveries.
Tullow is also planning an extensive water injection test programme in the fourth quarter of 2016 to collect data to optimise the field development plans.
On the crude oil pipeline from South Lokichar to the port of Lamu the Irish Explorer says a Joint Development Agreement is currently being progressed and is expected to be signed by the end of August 2016.
In the second half of 2016, Tullow adds it intends to continue to progress the technical, environmental and social studies and to conduct tenders required to proceed to FEED for both the upstream and pipeline projects.
Both FEED studies are expected to start in the first half of 2017.
“A standalone development in Kenya remains compelling; life-of-field development costs (comprising operating expenditure, capital expenditure and potential pipeline tariffs) are expected to be in the region of $25 to $30 per barrel,” says
On the Early Oil Pilot Scheme project which involves transporting oil from South Lokichar to Mombasa, utilising road or a combination of road and rail, is being assessed with commencement subject to agreement with National and County Governments.
The EOPS would provide technical and nontechnical information that will assist in full field development planning, utilising existing upstream wells and oil storage tanks to initially produce approximately 2,000 bopd gross around mid-2017.
Meanwhile Tullow Oil has announced a $30 million profit in the first half of 2016 a turnaround from $68 million compared to the same period last year. During this half Tullow Oil Capital expenditure amounted to $589 million with $561 million invested in development activities and $28 million in exploration and appraisal activities. More than 85% of the total was invested in Kenya, Ghana and Uganda and 94% was invested in Africa.