{"id":104964,"date":"2023-10-15T18:04:26","date_gmt":"2023-10-15T18:04:26","guid":{"rendered":"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year"},"modified":"2023-10-15T18:48:23","modified_gmt":"2023-10-15T18:48:23","slug":"tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year","title":{"rendered":"Tullow uneasy over asset value as final decision pushed to next year"},"content":{"rendered":"

Africa-Press – Kenya. <\/strong><\/span>Uncertainties on the value of Project Oil Kenya now remains a concern for British oil explorer-Tullow, with the government pushing approvals of its Field Development Plan to next year.<\/p>\n

This is from last month, when Energy Cabinet Secretary Davies Chirchir had indicated a decision would have been made, before Cabinet and Parliament approvals.<\/p>\n

In the latest developments, the Energy and Petroleum Regulatory Authority (EPRA), the energy sector regulator, has since been assigned to seek the services of a third party, as a consultant in the process.<\/p>\n

\u201cThe regulator has recently engaged third party consultants to review the revised FDP and extended the review period to Q1 2024. The Group expects a production licence to be granted once government due process has been completed,\u201d the firm said in its financial brief.<\/p>\n

The assessment by government includes whether Kenya is interested in pursuing or dropping the Turkana oil project.<\/p>\n

If the project continues, then the government will have to give its input on how Kenya\u2019s crude will be handled by the investors.<\/p>\n

This includes the planned construction of the 852 km Lokichar-Lamu pipeline for transporting crude oil from Turkana to Lamu port, for export.<\/p>\n

Tullow however now says the Group has identified uncertainties in respect to the ability to realise the estimated VIU; or the present value of the future cash flows expected to be derived from its assets.<\/p>\n

This is in line with receiving and subsequently finalising an acceptable offer from a strategic partner and securing governmental approvals relating thereto, obtaining financing for the project and government deliverables.<\/p>\n

\u201cThese items require satisfactory resolution before the Group can take a Final Investment Decision (FID). The Group continues to progress with the farm down process,\u201d it said.<\/p>\n

The firm is currently seeking strategic partners in Project Oil Kenya after the withdrawal of Africa Oil Corporation and Total Energies.<\/p>\n

The two gave notice of their respective withdrawal from the Blocks 10BA, 10BB and 13T Production Sharing Contracts and the Joint Operating Agreements, effective 30 June 2023.<\/p>\n

They cited \u201cdiffering internal strategic objectives.\u201d<\/p>\n

Due to the binary nature of these uncertainties, the Group was unable to either adjust the cash flows or discount rate appropriately.<\/p>\n

It has therefore used its judgement and assessed a probability of achieving FID and therefore the recognition of commercial reserves.<\/p>\n

According to Tullow, certain risks have increased since December 2022, predominantly around farm down and project financing.<\/p>\n

This has been partially offset by an increased equity interest in the project.<\/p>\n

Based on this, the Net Present Value has been revised to $246.7 million (Sh36.8 billion) and an impairment of $9.1 million (Sh1.4 billion) has been recognised as at June 30, 2023.<\/p>\n

Net present value is used to determine whether or not an investment, project, or business will be profitable down the line.<\/p>\n

\u201cShould the uncertainties around the project be resolved, there will be a reversal of a previously recorded impairment,\u201d Tullow noted.<\/p>\n

However, if the uncertainties are not resolved there will be an additional impairment of $246.7 million.<\/p>\n

During the first half of 2023, the Group has written off exploration costs of $10 million (1H 2022: $87 million).<\/p>\n

According to management, the costs were predominantly driven by Kenya, where withdrawal of the JV Partners led to a re-assessment of risks associated to reaching a final investment decision, resulting in the Sh1.4 billion a $9 million impairment.<\/p>\n

Discussions with the Kenyan government on approval of the Field Development Plan (FDP) commenced in January last year, after submissions had been made in December the previous year.<\/p>\n

An updated FDP was submitted on March 3, 2023 for review.<\/p>\n

Tullow which currently owns 100 per cent of the Turkana oil project is in talks with a number of potential investors, it has reported.<\/p>\n

\u201cTullow is now the sole partner in the project.This has created a more flexible proposition for a strategic partnership and discussions continue with several interested parties,\u201d management said.<\/p>\n

Indian Oil Company\u2013ONGC Videsh Limited (OVL) is among those reported to be interested in taking up a stake in the British firm\u2019s Kenyan assets.<\/p>\n

ONGC Videsh is reported to be seeking clarity before making an investment decision.<\/p>\n

\u201cSeveral interest parties including India\u2019s ONGC Videsh Limited have expressed their interest in coming on board as a strategic partner in the development of our Kenyan asset,\u201d Tullow Kenya BV managing director Madhan Srinivasan, told the Star.<\/p>\n

Whilst the process has taken longer than expected, Tullow remains focused on securing a strategic partnership this year, he said.<\/p>\n

Failure to secure a strategic partner would however impact on its ability to progress the Kenya project to final investment decision and unlock value, the firm\u2019s leadership noted.<\/p>\n

CS Chirchir had earlier indicated the government was also in talks with Chinese and Indian investors to put capital in the project, as it reviews the final investment.<\/p>\n

He said Kenya would continue to back Tullow’s push for commercial oil production in Turkana, despite the timelines shifting to beyond 2027.<\/p>\n

For More News And Analysis About Kenya<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Kenya. Uncertainties on the value of Project Oil Kenya now remains a concern for British oil explorer-Tullow, with the government pushing approvals of its Field Development Plan to next year. This is from last month, when Energy Cabinet Secretary Davies Chirchir had indicated a decision would have been made, before Cabinet and Parliament […]<\/p>\n","protected":false},"author":84,"featured_media":104963,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[6857,7003,544],"class_list":["post-104964","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-kenya","tag-kenya"],"yoast_head":"\nTullow uneasy over asset value as final decision pushed to next year - kenya<\/title>\n<meta name=\"description\" content=\"Uncertainties on the value of Project Oil Kenya now remains a concern for British oil explorer-Tullow, with the governme ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tullow uneasy over asset value as final decision pushed to next year\" \/>\n<meta property=\"og:description\" content=\"Uncertainties on the value of Project Oil Kenya now remains a concern for British oil explorer-Tullow, with the governme ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year\" \/>\n<meta property=\"og:site_name\" content=\"kenya\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2023-10-15T18:04:26+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-15T18:48:23+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/kenya\/sites\/28\/2023\/10\/sm_1697382956.150082.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"750\" \/>\n\t<meta property=\"og:image:height\" content=\"497\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/kenya\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Tullow uneasy over asset value as final decision pushed to next year\",\"datePublished\":\"2023-10-15T18:04:26+00:00\",\"dateModified\":\"2023-10-15T18:48:23+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year\"},\"wordCount\":831,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/kenya\/sites\/28\/2023\/10\/sm_1697382956.150082.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Kenya\",\"Kenya\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year\",\"url\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/tullow-uneasy-over-asset-value-as-final-decision-pushed-to-next-year\",\"name\":\"Tullow uneasy over asset value as final decision pushed to next year - 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