The National Assembly has questioned Kenya’s commercial oil prospects after Tullow Oil announced its exit with sale of its local subsidiary to Gulf Energy for Ksh 15.5 billion ($120m).
The Budget and Appropriations Committee in its budget estimates for 2025/26 fiscal year tabled on Wednesday said there was limited information available on the deal which could now impact Kenya’s commercial oil prospects.
On April 11, 2025, Tullow Oil Plc said it had entered into a sale agreement with Gulf Energy for acquisition of its entire stake in Tullow Oil Kenya BV which has been undertaking oil development in Kenya for the last thirteen years.
“The committee observed that Tullow Oil plc has commenced the exit process through a proposed sale of its entire interest in Project Oil Kenya to Gulf Energy Limited,” said the committee.
It added, “However there is limited information regarding the terms of the exit, the implications of the transaction on Kenya’s commercial oil prospects, and its potential impact on the completion and timely approval of the Field Development Plan (FDP) which remains pending before submission for parliamentary ratification.”
The FDP has faced delays after the first one was rejected by the Energy and Petroleum Regulatory Authority (EPRA).
The plan was meant to outline Tullow’s plans for Kenya’s oilfield development, environmental and social impact, highlight production costs.
In March this year, the National Assembly Liaison Committee in its report on the Budget Policy Statement directed the energy ministry in collaboration with EPRA to fast track the onboarding of a strategic investor, review and approve the plan for development of oilfields in South Lokichar by June 30, 2025.
MPs say the delays in approving the plans as well as the exit of Tullow Oil Kenya raises concerns about the continuity, governance and strategic direction of the country’s nascent oil industry.
Under the Early Oil Pilot Scheme (EOPS) completed in 2020 with Joint Venture Partners, Tullow Kenya managed to export 200,000 barrels of oil which earned the country Ksh 248 million.
According to the firm, the reservoir and production data gathered during EOPS was used in the updated Field Development Plan (FDP), which intended to produce up to 120 kilobarrels of oil per day.
Tullow Oil expects to complete the transaction with Gulf Energy on June 30, by 2033 upon payment of the last tranche amounting $40 million.
The British oil firm will also receive quarterly royalty payments of $0.5 per barrel of crude oil multiplied by 80pc of total production, subject to oil price, resource and production related conditions.
In the Lokichar Basin, Tullow Oil Kenya has been undertaking oil explorations on Block 10BA, Block 13Tand Block 10BB. The firm also holds 100pc stake on Block 12B in Lake Victoria Basin.
