The Presidents of Kenya and Uganda agreed to pursue two separate crude oil export pipelines for the development of Kenya’s South Lokichar oil fields and Uganda’s Lake Albert oil fields. The Uganda pipeline route will be through Tanzania from the Ugandan town of Hoima to the Tanzanian port of Tanga. The pipeline development is being led by Total and the Government of Uganda. In Kenya, Tullow and its upstream partners Africa Oil and Maersk Oil, along with the Government of Kenya, are currently negotiating a Joint Development Agreement to implement the Kenya crude oil pipeline which will run from South Lokichar to the port of Lamu. It is anticipated that for both the Kenya and Uganda pipelines, technical, environmental and social studies and tenders required to proceed to FEED will commence in the second half of 2016 with the objective of commencing FEED in 2017.
In addition to progressing the full field development work in Kenya, an Early Oil Pilot Scheme (EOPS) transporting oil from South Lokichar to Mombasa, utilising road or a combination of road and rail, is being assessed to provide reservoir management information to assist in full field development planning. The EOPS would utilise existing upstream wells and oil storage tanks to initially produce approximately 2,000 bopd gross around mid-2017, subject to agreement with National and County Governments.
KENYA EXPLORATION & APPRAISAL
In the first half of the year, Tullow concluded its first phase of exploration and appraisal in the South Lokichar Basin. The success of this programme and ongoing analysis of the discoveries has led to an upgrade of the South Lokichar resource estimate up to 750 mmbo. Significant upside remains across the South Lokichar Basin with the potential to increase the resource estimate to around 1 billion barrels of oil. The Kenya Joint Venture Partners therefore plan to recommence drilling activities in the fourth quarter of 2016 with an initial programme of four wells in the South Lokichar basin and the potential to extend this by a further four wells. In addition, Tullow is planning an extensive water injection test programme in the fourth quarter of 2016 to collect data to optimise the field development plans.
Exploration activity continued outside of the South Lokichar basin in the first half of 2016, and the Cheptuket-1 well in the Kerio Valley Basin was successfully completed in March 2016. The well encountered good oil shows, seen in cuttings and rotary sidewall cores, across an interval of over 700 metres. Further exploration activities in this basin and Tullow’s remaining unexplored Kenyan acreage, continue to be evaluated.