Tullow to Start Initial Oil Pumping in Kenya After Resource Gain

Tullow Oil Plc (TLW), the U.K. explorer that found Kenya’s first oil, will start initial production next year after finding more resources in the Lokichar Basin.

Tullow raised its resources estimate about 20 percent to more than 300 million barrels of oil equivalent after drilling the Etuko-1 discovery, it said today in a statement. Africa Oil Corp. (AOI), its partner, said the well was extended in Block 10BB, finding about 50 meters (164 feet) of addition oil column.

“We’ve certainly reached the threshold for development,” Tullow Chief Operating Officer Paul McDade said in a phone interview. “We are starting to think about other options within Kenya to do earlier production by road and by rail.”

The partners have made three discoveries in the basin and plan further exploration and appraisal over 12 to 18 months before declaring the project commercial. Tullow plans to export Kenyan oil, which may be joined with volumes from Uganda, South Sudan and possibly Ethiopia, by pipeline when output rises.

“We are likely moving ahead pretty soon” with a pipeline preliminary feasibility study that may bring oil from Uganda and Kenya to the Indian Ocean coast, McDade said. “Very limited volumes” can be brought to Kenya’s market as soon as next year and higher volumes as soon 2016 before the pipeline is built.

Tullow today trimmed its forecast for full-year production to 84,000 to 88,000 barrels of oil equivalent a day, partly because of a water pump failure at its Jubilee field off Ghana, where Tullow holds about a 35 percent stake.

Production at the field, a tie-up with Anadarko Petroleum Corp. and Kosmos Energy Ltd. (KOS), makes up about 40 percent of Tullow’s output. It’s now expected to pump 95,000 barrels of oil a day this year, down from 104,000 barrels in the first half.

Earlier this month, Tullow forecast for this year as much as 90,000 barrels a day. First-half volumes were 88,600 barrels a day, according to the statement. The company reiterated that first-half revenue rose 15 percent to $1.35 billion.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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