Gulf Energy has paid KSh4 billion to Tullow Oil, easing months of delays and reviving momentum in the Turkana oil project after parliamentary approval of its development plan.
The payment is part of an overdue second instalment of USD40 million (KSh5.18 billion) linked to the South Lokichar oilfields. The delay had persisted since December 2025 when lawmakers were expected to ratify the project’s commercialisation plan.
Tullow, through its Kenyan subsidiary, confirmed it received USD36 million (KSh4.67 billion) earlier in March 2026. The remaining USD4 million (KSh518.56 million) is expected by the end of next week, subject to completion of operational transition processes.
The delayed payment had raised concerns over the pace of progress in Kenya’s long-awaited oil production ambitions.
Parliament approval unlocks funds
The delay in settling the instalment was tied to late approval by Parliament of the Field Development Plan for the South Lokichar project.
Tullow had earlier warned that the postponement would affect its financial performance for the year ended December 2025. In filings to the London Stock Exchange, the company said the delay negatively impacted its cash flow.
“This is the second instalment of proceeds from the Kenya disposal and follows ratification by the Kenyan Parliament,” the company said in a trading update.
It added that the final portion of the instalment will be paid upon completion of transition support services, expected before the end of March 2026.
Deal structure and remaining payments
Gulf Energy acquired the Turkana oil project for USD120 million (KSh15.56 billion) through its affiliate Auron Energy E&P Limited in September 2025, paying an initial USD40 million.
The remaining USD80 million is structured into milestone-based payments. A final tranche of USD40 million will be paid over five years starting in the third quarter of 2028 and ending by 30 June 2033.
Tullow retains rights to royalty payments under certain conditions, as well as a no-cost back-in option for up to 30% participation in future development phases of the oilfields.
Production plans gather pace
With the commercialisation plan now approved, Gulf Energy is moving to accelerate oil production in Blocks T6 and T7 in South Lokichar.
The company has secured an onshore drilling rig valued at USD15 million (KSh1.93 billion) from Great Wall Drilling Company in the United Arab Emirates under a long-term lease. The rig is expected to arrive in Kenya before the end of March 2026.
Initial production is projected at 20,000 barrels per day between 2026 and 2032. Output is expected to increase to 50,000 barrels per day from 2032.
The progress marks a key step toward Kenya’s entry into commercial oil production, a goal that has faced repeated delays over the years.
