Kenya signs agreement for First Ever Oil Development

The agreement signed by the Ministry of Petroleum and Mining on behalf of the government will see the oil majors build a 60,000 – 80,000 barrels per day (bpd) processing facility.

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Kenya signs agreement for First Ever Oil Development
Pipes delivery at a Tullow oil site of operation. [Photo/www.tullowoil.com]

Kenya has signed a Head of Terms agreement with joint venture partners, Africa Oil, Tullow Oil plc and TOTAL S.A for the first ever development of an oil processing facility and a crude oil export pipeline.

The agreement signed by the Ministry of Petroleum and Mining on behalf of the government will see the oil majors build a 60,000 – 80,000 barrels per day (bpd) processing facility for oil discovered in the country’s northwest and, a crude oil export pipeline to the coastal town of Lamu.

The landmark agreements signed with the joint venture partners are for the discoveries of oilfields in Bock 10BB and 13T, in particular in the Amosign, Ngamia and Twiga fields.

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Speaking during the signing in Nairobi, Kenya’s Ministry of Petroleum and Mining cabinet secretary, John Munyes, said that the agreements signed would provide “a framework and commercial certainty required to move ahead with negotiating the fully termed upstream and midstream long-form agreements ahead of the projects’ final investment decision (FID).”

In an updated statement, Tullow oil said it now expects to see first oil three years after FID. The firm had said it would reach FID by the end of this year.

Keith Hill, President and CEO of Africa Oil, commented, “We are very pleased with the signing of the Heads of Terms agreements as it marks an exciting step forward for the project.”

He said that the conclusion of the negotiations around key fiscal and commercial principles is an important and major milestone towards a Final Investment Decision, providing a solid development framework and confidence to all parties that the project is robust at low oil prices.

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“We have absolute fiscal certainty and we need to make sure that this project will make money for the Government of Kenya and for the international contractors at the current oil price uncertainty and low oil prices globally,” said Tullows Executive Vice President, Mark Macfarlane said in his initial statement.

At a combined estimated cost of US$3 billion, the project will be the largest single private investment in Kenya.

Tullow is Operator on the project and holds a 50 percent interest while Total S.A and Africa Oil Corp. hold 25 percent, respectively.