The Ministry of Petroleum could not agree with the British Oil company saying that the bill is excessive and not justified.
Tullow Oil Kenya has stakes in oil blocks 10 BA, 10BB and 13T located in South Lokichar Basin. The company is reported to have submitted their bill for compensation last week.
If the two parties fail to agree on the amount of compensation, they may be forced to go to United Kingdom for arbitration process. This disagreement affects Tullow Oil Kenya negatively following the already existing financial woes facing the company.
The financial challenges facing Tullow Oil Kenya are reported to have been caused by the delays in oil production in Kenya, lower quality of oil in Guyana than it was expected and weak output in Ghana. Hence, Tullow Oil Kenya is planning to reduce their human resources by a third in order to save at least USD$20 million.
Tullow Oil Kenya estimates that the oil fields in Lokichar where they have stakes has the capacity of 560 million barrels of oil and can produce up to 100,000 barrels of oil every single day.
As part of the Early Oil Pilot Scheme (EOPS), at least 2,000 barrels of oil are being produced every day. There have been delays in construction of an oil pipeline from Lokichar to Lamu in the coastal region of Kenya.
In August 2019, a cargo of 250,000 barrels of oil was exported to Singapore at a cost of KES 1.2 billion.
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