"Tullow's Kenya Oil Operations Threatened as Impasse Endures"

Tullow Oil Plc may shut down operations in northern Kenya in two weeks unless persistent issues with local residents, which threaten progress of the project, are resolved. Disruptions in the remote Turkana region have already halted the shipments of a pilot program to test early production and deliver oil from Lokichar to the port of Mombasa about 1,000 kilometers (640 miles) away, for future export. Tullow, along with partners Africa Oil Corp. and Total SA, plans to make a final investment decision next year to ramp up production by 2021 and develop a pipeline to ultimately transport the estimated 560-million-barrel resource. Tullow has enough supplies to run its Kapese Integrated Operation Base for another 14 days, “after which we will have no option other than a complete shut-down of the camp,” the company said in an emailed statement...

Kenya’s recent celebration of the first oil shipments, a milestone since Tullow’s discoveries in 2012, has been short lived. Aggrieved local community members seized trucks transporting crude on June 28 and broke into Tullow’s Ngamia 8 oil well and storage site, protesting rampant insecurity in Turkana county. Lawmakers have linked the protests to local residents having their share of oil revenue halved to 5 percent by the government and demands for jobs and business opportunities such as supply tenders...

The companies and both local and national governments need to resolve the issue of equitable distribution of revenue from the oil or they may face more public discontent, according to Ahmed Salim, an analyst with Teneo Intelligence. “Until they get that right, this is going to be something that’s going to disrupt Turkana and it’s going to disrupt Tullow Oil for the foreseeable future,” he said in an interview.