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Kenya's National Oil and Schlumberger Sign Field Development Deal

Source: Reuters 4/13/2018, Location: Africa

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Kenya’s National Oil Corporation and U.S. oil services company Schlumberger have agreed to finalize a field development plan on behalf of the government for oil blocks in the northwest of the country. The East African nation discovered commercial oil reserves in its Lokichar basin in 2012.

National Oil said in a statement seen by Reuters on Friday that the agreement with Schlumberger would create a development blueprint for the field in the next year.

“This FDP (field development plan) will provide the government with an independent view of the development of the Lokichar oil discoveries, which will be useful in supporting the government in evaluating work already being done by investors Tullow, Africa Oil and Maersk,” National Oil said.

Britain’s Tullow Oil and Canada’s Africa Oil were first to discover oil in Kenya, holding an equal share in the 10 BB and 13T blocks where Tullow is the operator.

French oil major Total later acquired a stake in the blocks from AP Moeller-Maersk and the Kenyan government is expected to take a stake through National Oil.

National Oil did not disclose the value of the deal.

Tullow expects to reach a final investment decision (FID) on the project in 2019 and first oil production by 2021-22.

Last year the government signed an agreement with Tullow and its partners for a feasibility study on a proposed pipeline to transport the crude oil to a seaport on the Indian Ocean coast.

Recoverable reserves are estimated at 750 million barrels and considered feasible for production with oil prices at $55 a barrel, which is below current levels.

The ministry said last year that the pipeline — to run 820km (500 miles) between Lokichar and Lamu on Kenya’s coast — would cost $2.1 billion and was expected to be completed in the first quarter of 2021.

National Oil handles the government’s interest in both the upstream and downstream oil activities. It owns exploration blocks and runs petrol stations in Kenya with about a 5 percent share of the fuel retail market.

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