Tullow Oil to commence ESIA for South Lokichar Oilfied Development in Q2, 2018

UK Based oil explorer Tullow Oil has indicated that the baseline Environmental and Social Impact Assessments (ESIA) and the Front End Engineering Design (FEED) for the foundation development South Lokichar, Kenya  will commence in the second quarter of 2018, with Final investment Decision (FID) targeted for 2019 and First Oil for 2021/22.

According to statements in the company's 2017 Full year results, Tullow's Executive Vice President for East Africa, Mark MacFarlane says that Tullow will this year focus on taking the project towards FID in 2019 with a prudent and flexible plan of execution that can take advantage of low oil services costs and deliver first oil and cash flow as soon as possible. MacFarlane expressed confidence that following good progress being made in Uganda towards FID, East Africa is on the verge of becoming a major oil exporting region. 

Tullow and its Joint Venture Partners have proposed to the Government of Kenya that the Amosing and Ngamia fields should be developed as the Foundation Stage of the South Lokichar development. This stage would include a 60,000 to 80,000 bopd Central Processing Facility (CPF) and an export pipeline to Lamu. This approach brings significant benefits as it enables an early FID of the Amosing and Ngamia fields taking full advantage of the current low-cost environment for both the field and infrastructure development and provides the best opportunity to deliver First Oil in a timeline that meets the Government of Kenya (GoK) expectations. The installed infrastructure from this initial phase can then be utilised for the optimisation of the remaining South Lokichar oil fields, allowing the incremental development of these fields to be completed at a lower unit cost post-First Oil.

The Foundation Stage is currently planned to involve an initial 210 wells through 18 well pads at Ngamia and 70 wells through seven well pads at Amosing. This stage will target volumes of around 210 mmbo of the total estimated 2C resources of 560 mmbo and a plateau rate of 60,000 to 80,000 bopd. The incremental development of the remaining 2C resources and the significant upside potential is expected to increase plateau production to 100,000 bopd or greater. Total gross capex associated with the Foundation Stage is expected to be $2.9 billion, of which $1.8 billion is investment in the upstream and $1.1 billion is for the pipeline.

Tullow also confirmed that the EOPS Agreement between the Joint Venture Partners and the Government of Kenya that was signed on 14 March 2017 allowing all EOPS upstream contracts to be awarded was on course. Initial injectivity testing has started at Ngamia-11 and oil production and water injection facilities are being constructed in the field ready to commence production/injection in the first quarter of 2018. Oil produced is being initially stored until all necessary consents and approvals are granted and work is completed for the transfer of crude oil to Mombasa by road.