FAQs

The Production Sharing Contracts (PSCs) for Blocks T5, T6, and T7 have been updated multiple times since 2007 to reflect legitimate corporate developments — including ownership changes, farm-out agreements, government-approved assignments, and the recent acquisition by Gulf Energy.

Key Milestones — Block 10BB (T6)

• 2007: Original PSC signed with Turkana Drilling Consortium (Kenya) Limited.
• 2009–2011: Control transferred to Africa Oil Corporation; Lion Energy’s interest restructured and ultimately assigned back to AOTL.
• 2010: Tullow Kenya BV acquired a 50% participating interest from AOTL (approved by Government, 6 October 2010).
• 2015: Maersk K2 acquired 25% from AOTL; later became TotalEnergies K2 following Total S.A.’s acquisition of Maersk Oil & Gas.
• 2023: AOTL and Total K2 each assigned their remaining 25% to Tullow, giving Tullow 100% interest in Block T6 (Government-approved, 18 September 2025).

Key Milestones — Block 13T (T7)

• 2008: Original PSC signed with Platform Resources Inc.
• 2010: Africa Oil Kenya BV (AOKBV) acquired 100% from Platform; NOCK’s interest raised to 22.5% carried interest.
• 2011: Tullow acquired 50% from AOKBV; Maersk K3 later acquired 25% from AOKBV.
• 2023: All remaining interests consolidated under Tullow, resulting in 100% participation (Government-approved, 18 September 2025).

Transition to Gulf Energy

• Government approved the change of control to Gulf Energy (Auron Energy E&P Limited) on 17 April 2025, finalised 25 September 2025.
• Tullow was formally renamed Gulf Energy E&P BV in the Netherlands on 25 September 2025, and its Kenyan branch updated accordingly by 24 October 2025.
• PSC addendums for Blocks T6 and T7 were executed on 21 November 2025, with the FDP transmitted to Parliament on 24 November 2025.

Cost Recovery Framework

The Petroleum Act, 2019 allows contractors to recover exploration and development costs (Cost Petroleum) before sharing remaining production (Profit Petroleum) on a sliding R-Factor scale. The revised cost recovery ceiling aligns Kenya with comparable African jurisdictions:

This adjustment does not reduce the Government’s fiscal take. Instead it accelerates First Oil, increases long-term revenue, reduces abandonment risk, and promotes local content investment.

Clause 27(2)(b) was amended via the first addendum to the PSC for Block T7 (formerly Block 13T) to bring greater transparency, precision, and legal certainty to the definition of capital expenditure for both the Government of Kenya and Gulf Energy E&P BV.

Under the revised clause, “capital expenditure” means qualifying expenditure — other than intangible drilling costs with no salvage value — including expenditure on labour, fuel, repairs, maintenance, hauling, mobilisation, and supplies and materials. These costs are recovered in the following order of priority:

1. Production costs
2. Development costs
3. Exploration & Appraisal costs
4. Decommissioning costs

Note: Supplies and materials for well casings or other well fixtures used for or incidental to drilling, cleaning, deepening, completing, or abandoning wells are explicitly excluded from this definition.

This ordering is advantageous to the Government — the Government’s Back-in Nominee participates in cost recovery from production and development costs from the outset.

Both the Field Development Plan (FDP) and the Production Sharing Agreements place strong emphasis on local content, community engagement, and mutual benefit — underpinned by a ring-fenced Local Content Strategy (FDP Appendix F, Petroleum Act 2019).

“To ensure the South Lokichar Basin Development project maximises socio-economic benefits for Kenyans through employment, procurement, capacity building, and stakeholder engagement.”

Four Strategic Pillars

• Employment — Kenyan workforce prioritised, with emphasis on Turkana communities.
• Procurement — Kenyan suppliers and SMEs promoted across the full supply chain.
• Capacity Building — Technical skills development for workforce and local enterprises.
• Stakeholder Engagement — Transparency and social licence maintained throughout operations.

Quantitative Commitments

• Logistics (Phase 1): 600 trucks for crude evacuation — at least 33% sourced locally, with priority for Turkana-based cooperatives.
• Logistics (Phase 2): 155 rail wagons daily for crude evacuation during ramp-up production.
• Workforce — Unskilled: 100% reserved for local (Turkana) communities.
• Workforce — Semi-skilled: Priority for Turkana residents, then wider Kenyan nationals.
• Workforce — Skilled: Kenyan professionals prioritised throughout.
• Upstream operations: Minimum 50% Kenyan workforce target.
• Civil works & midstream: 100% Kenyan workforce target.

Social Investment Areas

Community Development initiatives will span education, healthcare, water supply, roads, and livelihoods restoration — implemented in direct consultation with affected communities under a dedicated Community Development Plan.

As an indigenously owned Kenyan entity, Gulf Energy’s “local-first execution strategy” leverages existing infrastructure — road, rail, and storage — to accelerate timelines, reduce costs, and deliver First Oil efficiently.