(3 minutes read)
· East African countries like Kenya and Uganda, which have
boasted of their oil wealth and estimated that the millions of crude
oil embedded on its landmass would rewrite the their development
discourse are staring at a bleak outlook if the present state of oil
prices declining at accelerated speed continues
· Now once upbeat Tullow Oil is looking at options of a
partial or complete exit from both projects spread across Kenya and
Uganda saddled with financial crunch
East African countries like Kenya and Uganda, which have boasted of
their oil wealth and estimated that the millions of crude oil embedded
on its landmass would rewrite their development discourse are staring
at a bleak outlook if the present state of oil prices declining at
accelerated speed continues.
The London-listed Tullow Oil – which mostly operates in Africa since
2012- estimates the Kenyan field to hold 560million barrels of oil
and expected to produce up to 100,000 barrels per day from 2022. The
company has also operations in Uganda, where the firm has been a key
partner in the Lake Albert project. That area is estimated to have
1.7bn barrels of recoverable oil and could reach up to 230,000 barrels
per day production on reaching full capacity.
Now once upbeat Tullow Oil is looking at options of a partial or
complete exit from both projects spread across Kenya and Uganda
saddled with financial crunch. The sustained fall of oil prices in the
international markets have created two problems. Foremost is the cut
in the expenditure on exploration, which should go side by side with
mining to keep the wheel rolling. The other is the heavy impact on the
bottom lines of the oil companies, which force them to restructure
their operations including partial or full withdrawal. The OPEC
countries have the resource strength to withstand the oil shocks since
they have a lot of resources tucked in their coffers to cope up with
financial crisis. Moreover, they have been in the business for long.
The other oil main producers, US and Russia, have massive
manufacturing and services sectors to absorb the oil shocks. That is
not the case with most of the African countries, which are late
entrants to the oil sector and the manufacturing and services sectors
are fragile.
