A British firm that has been conducting oil explorations in Turkana is threatening to exit the Kenyan market and write off its assets following uncertainties surrounding the business in the country.
Tullow Oil, one of the biggest oil exploring companies in the world, noted that unresolved uncertainties are threatening its prospects in continuing with operations in the country.
At the moment, Tullow Oil has assets valued at Ksh29.1 billion (USD255 million) in Kenya. However, through a financial report released on Wednesday, March 9, the company noted that it may be compelled to book an impairment charge of Ksh29.1 billion on its Kenyan assets.
"Should the uncertainties around the project be resolved there will be a reversal of previously recognised impairment. However, if the uncertainties are not resolved, there will be an impairment of Ksh29.1 billion (USD255 million)," Tullow stated.
Kenya first discovered oil in Turkana in March 2012 raising the hope of the country becoming an oil producer and exporter.
Tullow then entered into a deal to explore the oil in the Lokichar basin of Turkana. However, close a decade later, the company is yet to commercialise the fields.
In December 2021, Tullow presented a new plan stating that it intended to explore another oil field which is still awaiting a government approval.
In the plan, Tullow stated that it intend to recover 585 million barrels of oil from the project which would classify Kenya reserves close to other oil producing nations.
The British company has been recording declining returns following the sale of some of its assets and due to oil hedges.
It further recorded a drop in overall production following the sale of its assets and interests in Equatorial Guinea and the Dussafu Marine Permit in Gabon in 2021.
In Kenya, Tullow first planned to exit the market in June 2020 but suspended the plans later after negotiations with stakeholders in the oil and petroleum sector.
