12/08/22

IOC, OVL revive talks for stake in Tullow’s $3.5 billion project

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NEW DELHI: Flagship refiner-retailer IndianOil has roped in ONGC Videsh Ltd (OVL), the overseas investment arm of state-run explorer ONGC, to revive talks for buying a stake in Tullow Oil’s Lokichar oil field in Kenya in a deal size seen at more than $2 billion, if finalised.
Sources said senior executives from the two Indian entities are in Kenya on an exploratory mission. The mission’s findings will decide whether IndianOil and OVL decide to proceed to formalize a proposal.
The sources said IndianOil had in March shown some interest in acquiring stake in the project, the size of which was then estimated at $3.5 billion. But those initial contacts with Tullow withered – perhaps because of the project and investment size. This explains IndianOil roping in OVL, which brings on the table expertise in operating oil fields.
Tullow holds 50% stake in the south Lokichar field and is willing to give up operatorship in favour of a strategic partner. Total of France and Africa Oil Corporation hold 25% each.
The fields are located in blocks 10BB and 13T, while oil production is projected at 120,000 barrels per day. Total oil recovery is pegged at 585 million barrels over the field’s life.
The project has an Indian connection in Tullow chief executive Rahul Dhir, who headed Cairn India at the time the Indian arm of the then independent Scottish explorer made one of India’s largest onland oil and gas discoveries in Rajasthan’s Barmer district. Cairn was acquired by Vedanta in 2011 and merged with the parent in 2017.
The Lokichar oil is waxy just like Barmer crude, which, like the Indian project, will have a 825-km heated pipeline to transport the crude to Lamu for shipping.
Dhir was appointed Tullow CEO in July 2020 close on the heels of his Delonex, an Africa-focused company he had floated after quitting Cairn India, secured $600 million funding from Warburg Pincus. Dhir’s appointment came at a time when Tullow was struggling under a debt burden.

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