Tullow Oil plc (Tullow) says the transfer of crude oil from Turkana to Mombasa will remain suspended until further notice.
“In Kenya, the Early Oil Pilot Scheme (EOPS) is suspended due to severe damage to roads caused by adverse weather in the fourth quarter of 2019. Trucking remains on hold until all roads are repaired to a safe standard,” Tullow said in a trading update posted on Wednesday.
The transfer of stored crude oil by road is part of the Early Oil Pilot Scheme that was flagged off in June 2018.
Kenya is using the Early Oil Pilot Scheme, which will soon be followed by the Full Field Development phase, to establish itself as a crude oil exporter in the region and provide valuable information for future exploration and development.
“Work continues with Joint Venture Partners and the Government of Kenya to progress the development project,” said Tullow.
Last year, rains washed away many roads and bridges, making transport impossible within the area.
Tullow Oil Writes off KSh81 billion Investment in Kenya and Uganda
The oil firm said it has written off $800 million (KSh81 billion) of its exploration costs in Kenya and Uganda after lowering its forecast for long-term crude oil prices.
“Exploration costs written off are predominately driven by a write-down of the value of the Kenya and Uganda assets due to a reduction in the group’s long-term accounting oil price assumption from $75 (KSh7,575) per barrel to $65 ( KSh6,565) per barrel,” it said.
However, the oil firm says the business remains intact.
“The fundamentals of our business remain intact: recent reserves audits demonstrate that we have a solid underlying reserves and resources base in West and East Africa, our producing assets continue to generate good cash flow and we retain a high-quality exploration portfolio. The Board and senior management are confident of the long-term potential of the portfolio and see meaningful opportunities to improve operational performance, reduce our cost base, deliver sustainable free cash flow and reduce our debt, ” said Dorothy Thompson, Executive Chair, Tullow Oil plc.
