This archive report was first published on 19 December 2019.
Published on December 19, 2019, the government's move comes as the country's first billion dollars from its first batch of crude oil exports was hailed as a milestone in August. However, the high cost of exploration and logistics has cast doubt on whether the oil will deliver the expected revenue.
The audit aims to confirm the validity of expenditures and the completeness of revenue and production based on the terms of the agreement and production sharing contracts of blocks 10BB and 13T. Tullow Oil estimates it has invested more than Sh200 billion in Kenya together with partners under its prospecting licence.
The government now wants to evaluate the project, which includes production volumes from 10BB and 13T currently licensed to Tullow. The audit also seeks to confirm that the income generated from the sale of the early oil pilot was accurately computed as well as the underlying risks and uncertainties.
Rating agency Moody's downgraded Tullow Oil's credit rating to B2 from B1 and probability of default rating to B2-PD from B1-PD, citing management's recent downward revision of its forward-looking production guidance following a review of the production performance issues experienced by the group in 2019.
