Kenya has resuscitated its long-stalled oil production ambitions after the government finally approved the South Lokichar Basin Field Development Plan, marking a historic turning point in the country’s pursuit of commercial oil production.
Energy and Petroleum Cabinet Secretary Opiyo Wandayi announced that he signed the instruments required for submission of the approved plan to Parliament for ratification, describing it as a historic point in Kenya’s drive to build a modern, competitive, first-world economy. This is the first time a Field Development Plan has advanced to this level, signaling Kenya’s shift from exploration to development and commercial production.
The process had been delayed for over a decade, prompting various partners in the project to exit. In April this year, Tullow Oil PLC agreed to sell its entire Kenyan portfolio to Gulf Energy Ltd for a minimum consideration of $120 million, effectively exiting a project that had faced years of regulatory delays, partner withdrawals, and investment uncertainty.
The plan was submitted to the Energy and Petroleum Regulatory Authority by Gulf Energy E&P BV, a Kenyan investor licensed to develop Block T6 and Block T7 in the Tertiary Rift Basin. It outlines how six discoveries within the development area will be fully developed, alongside further appraisal and exploration aimed at maximizing resource recovery.
The strategy follows a phased approach, beginning with the largest and most technically mature reservoirs. The total investment needed to fully develop the six discoveries is approximately $6.1 billion (Sh793 billion), with a best-estimate recovery of 326 million stock-tank barrels over the 25-year contract period. Phase 1 is projected to produce 20,000 barrels of oil per day, rising to 50,000 barrels per day under Phase 2.
The Contractor targets First Oil by December 2026 and full ramp-up by 2032.
“This development will generate benefits felt both nationally and locally. It will create jobs, open opportunities for local suppliers, stimulate new enterprises, and support long-term economic activity,” Wandayi said.
For Northern Kenya, especially Turkana and West Pokot, the project is expected to help improve infrastructure, attract additional investment, and support local priorities through revenue-sharing arrangements. Communities will benefit directly through employment, procurement opportunities, skills development, and social investments.
At the national level, the South Lokichar Development strengthens the foundation of a future first-world economy by diversifying Kenya’s economic base, improving the balance of payments, and positioning the country as a predictable and attractive destination for global capital. It will also build new technical competencies in petroleum engineering, operations and logistics, and capabilities that contribute to long-term national competitiveness.
“Successful execution of this project will signal to the world that Kenya is ready for large-scale, high-value industrial investments,” Wandayi said. “This is the single most significant private sector-driven upstream petroleum investment in recent times.”
The ministry stated that the government has full confidence in Gulf Energy’s capacity and commitment to deliver First Oil within the agreed timelines and to progress to full-field development. As implementation continues, the Contractor is expected to prioritize local content, particularly local employment, procurement, and capacity-building for host communities.
Wandayi revealed that plans are underway to make additional blocks available through licensing rounds and direct negotiations, with further opportunities existing in data reprocessing, acquisition, processing, and interpretation under the multi-client framework.
Source: the-star.co.ke