• Tullow has set the capital expenditure for its Kenyan operations at Sh4.06 billion ($40 million) for the year 2020, a reduction of 43% compared to last year. 
  • With the spending slashed,Turkana oil fields will take a hit with job losses in the offing as the firm scales down its outlay.
  • Tullow has also suspended Kenya’s early oil export scheme due to severe damage to roads caused by heavy rains in the fourth quarter of last year.

British oil explorer Tullow Oil has slashed its spending on Kenya’s oil exploration operations in what is turning out to be a hard year for the oil firm.

Tullow has set the capital expenditure for its Kenyan operations at Sh4.06 billion ($40 million) for the year 2020, a reduction of 43% compared to last year. In 2018, Tullow’s outlay amounted to Sh17.6 billion ($176 million) while 2017 saw it spend Sh22.5 billion ($225 million).

In a trading update on the London Stock Exchange (LSE), Tullow said that it would spend a total of Sh35.5 billion ($355 million) in capex this year in its global operations. The company spent Sh7 billion ($70 million) in Kenya capex in 2019, which marked a trend of declining spending due to scaled down drilling activity.

“2020 capex breakdown (comes to) Sh14 billion ($140 million) in Ghana, Sh8.12 billion ($80 million) on West Africa non-operated, Sh4.06 billion ($40 million) in Kenya, Sh1.52 billion ($15 million) in Uganda and Sh7.6 billion ($75 million) on exploration and appraisal activities,” Tullow said in its trading update.

A general view shows an oil rig used in drilling at the Ngamia-1 well on Block 10BB, in the Lokichar basin, Turkana.
A general view shows an oil rig used in drilling at the Ngamia-1 well on Block 10BB, in the Lokichar basin, Turkana.

The London-based company is currently embroiled in governance disputes while its partner in Lokichar, Africa Oil is in financial woes. On top of that the Tullow has run into a string of bad luck in Ghana and Guyana where it came ‘empty’ on its oil ventures.

With the spending slashed, Turkana oil fields operations will take a hit with job losses in the offing as the firm scales down its outlay.

Kenya’s spending cut follows Tullow trend in Ghana where the british firm has also made some drastic budget cuts in recent months. On December 9th, 2019, Tullow cut forecasts for production from Ghana for the fourth time in 12 months and suspended dividends.

Trucks of the first crude oil consignment from Lokichar,Turkana arrives at the Mombasa's Changamwe KPRL storage facility on Thursday 7th June, 2018. (The Standard)
Trucks of the first crude oil consignment from Lokichar,Turkana arrives at the Mombasa's Changamwe KPRL storage facility on Thursday 7th June, 2018. (The Standard)

After lowering its forecast for long-term crude oil prices in Kenya and Uganda Tullow Oil wrote off $800 million of its exploration costs.

Tullow has also suspended Kenya’s early oil export scheme due to severe damage to roads caused by heavy rains in the fourth quarter of last year.

Trucking remains on hold until all roads are repaired to a safe standard. Work continues with joint venture partners and the Government of Kenya to progress the development project,” the firm said.

Meanwhile, the Kenyan government is eyeing full commercial output sometime in 2023 having launched an early export scheme to test the market with an initial shipment of 200,000 barrels going out last year.