Gulf Energy has paid Tullow Kenya BV part of the overdue second instalment of $40 million (Sh5.18 billion) for Turkana oilfields, ending months of delays tied to approval of the commercialisation plan of the project.
Tullow Oil Plc, the parent firm of Tullow Kenya BV revealed that it received $36 million (Sh4.67 billion) early this month, with the remaining $4 million (Sh518.56 million) set to be paid by end of next week upon a successful transfer of operations.
Gulf fully bought the project for $120 million (Sh15.56 billion at current rates) through its affiliate Auron Energy E&P Limited on September 25, 2025 and paid the first $40 million.
The remaining $80 million was to be settled in two equal instalments upon hitting specified benchmarks but the second payment had been delayed from the set date of December 2025 when Parliament was expected to have ratified the commercialisation plan of the Turkana oil project.
Visitors are taken on a tour of the Ngamia-1 oil rig in Turkana county on April 5, 2012. It is normal to expect future disputes touching on boundaries in respect to the exploitation of fossil fuels. Photo/File
MPs delayed approving the plan, forcing Tullow to wait longer for the money. Tullow last month revealed the delays hurt the company’s cash flows for the year ended December 2025. “This is the second instalment of proceeds from the Kenya disposal and follows ratification by the Kenyan Parliament of the Field Development Plan for the South Lokichar oil project,” Tullow said in the new trading update.
“The final 10 percent of Tranche B proceeds ($4 million) is pending completion of transition support services, which is expected before the end of March 2026.” Regulatory filings made at the London Stock Exchange on February 20, 2026 revealed the delays had hit Tullow’s cash flows.
“However, our 2025 full year free cash flow was negatively impacted by the commodity price environment towards the end of the year and delays in receipt of Government of Ghana receivables and the second instalment of proceeds from the Kenya disposal,” Tullow had said in regulatory fillings at the London Stock Exchange on February 20, 2026.
The final tranche of $40 million, payable over five years from the third quarter of 2028 onwards and no later than 30 June 2033, is subject to the payment schedule as agreed under the terms of the Sale and Purchase Agreement between Tullow and Gulf.
Commercial production
Additionally, Tullow retains a right to royalty payments, subject to certain conditions, and a no cost back-in right for a 30 percent participation in potential future development phases of the Turkana oilfields.
Ratification of the commercialisation plan that Gulf presented, paves the way for the company to move ahead in its quest to start commercial oil production at Block T6 and Block T7 in South Lokichar by December this year.
Gulf has already secured an onshore oil rig for $15 million (Sh1.93 billion) from Great Wall Drilling Company in the United Arab Emirates on a long-term lease arrangement.
The rig –acquired on a lease basis— is expected to be shipped into Kenya before the end of this month as the firm races to beat its December deadline.
An estimated 20,000 barrels per day (bpd) of crude oil will be produced in the first phase (2026-2032) before it is scaled up to 50,000 bpd from 2032.
