Tullow spends Sh29bn on local suppliers in six years

Tullow employees. British oil exploration company Tullow has spent Sh29 billion on local contractor payments in the last six years, data shows. FILE PHOTO | NMG

By BRIAN NGUGI
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Summary

• Tullow said in its annual report that it spent Sh3.8 billion ($35.4 million) last year on suppliers compared to Sh3 billion in 2018.
• In 2017, the firm paid out Sh3.74 billion, while in 2016 the expenditure stood at Sh2.83 billion.
• Payments in 2014 and 2015 stood at Sh8.25 billion and Sh7.59 billion, respectively during the height of its exploration activities in the Lokichar basin in Turkana County.
• The multinational attributed the 16 percent payments increase in 2019 to Early Oil Pilot Scheme trucking activities.

British oil exploration company Tullow has spent Sh29 billion on local contractor payments in the last six years, data shows.

Tullow said in its annual report that it spent Sh3.8 billion ($35.4 million) last year on suppliers compared to Sh3 billion in 2018.

In 2017, the firm paid out Sh3.74 billion, while in 2016 the expenditure stood at Sh2.83 billion. Payments in 2014 and 2015 stood at Sh8.25 billion and Sh7.59 billion, respectively during the height of its exploration activities in the Lokichar basin in Turkana County.

The multinational attributed the 16 percent payments increase in 2019 to Early Oil Pilot Scheme trucking activities.

“In 2019, 41 percent of the proportionate supplier spend was with Kenyan businesses, up from 37 percent in 2018,” says the firm in the report.

Tullow had earlier set the capital expenditure for its Kenyan operations at Sh4.06 billion ($40 million) for this year, a reduction of 43 percent compared to last year as the firm continues its shift in focus from exploration to production.

The lower capex points to leaner times for contractors providing services in the Turkana oilfields, with the potential of job losses as the firm scales down its outlay.

Locals have been clamouring for more participation in the firm’s contracts leading to sporadic conflicts with Tullow management.

Tullow, however said in the annual report it is building capacity for local suppliers to enable them compete with their international peers.

“As the Kenya project is in the development phase, focus has continued on capacity building activities,” it said.

“Over 250 trainees attended competency-based education training in areas such as electrical technology, welding and fabrication, motor vehicle mechanical engineering and plumbing.”

Kenya’s full oil export plans have however been facing delays, with the target date of 2022 looking unlikely given that work on the proposed Lokichar-Lamu pipeline is yet to start.