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Tullow Oil (Kenya), a subsidiary of Tullow Group has summoned its employees for an emergency meeting to discuss the restructuring of the company which may lead to the dismissal of some workers whose roles will be found to be redundant.
In a redundancy notice served by the company’s managing director Martin Mbogo, the company said that it has embarked on reviewing its business operations and financial performance pursuant to a meeting held at Town Hall on Wednesday, February 5, 2020.
This comes barely days after Total and Tullow Oil said they aim to reduce their stakes in Kenya’s first oil development with a joint sale that could see Tullow exit completely amid uncertainty over the project’s launch, banking and industry.
The two oil and gas producers have hired French bank Natixis to run the joint sale process for Blocks 10 BA, 10 BB and 13T in the South Lokichar Basin, the sources said.
London-listed Tullow, which operates the project, last year indicated it intended to sell up to 20 percent of its 50 percent stake in the blocks and was believed to be willing to sell the entire stake after disappointing exploration results in Guyana and production problems in Ghana that prompted the ousting of its chief executive and wiped out nearly half of the company’s market value.
French oil major Total, meanwhile, aims to sell up to half of its 25 percent stake in the Kenyan project.
The entire project is valued at between $1.25 billion to $2 billion, but it is hard to be precise because the development has yet to receive a final investment decision (FID), two of the sources said.
Tullow this month said it was still targeting FID by the end of 2020, with production starting in 2022, describing the timeline as “challenging”.
The fields already produce about 2,000 barrels of oil per day as part of an early production system. The oil is trucked from Turkana to the port city of Mombasa. A first cargo of 250,000 barrels was shipped on a tanker last August.
The project partners have also agreed with the Kenyan government to develop a crude oil pipeline from Lokichar to Lamu on Kenya’s coast.
Tullow and Toronto-listed Africa Oil, which holds a 25 percent stake in the blocks, first discovered crude oil in the Lokichar basin in 2012. Tullow estimates the fields contain 560 million barrels in proven and probable reserves and expects them to produce up to 100,000 barrels per day from 2022.