Oil India Limited (OIL) has partnered with ONGC Videsh, the overseas investment arm of ONGC, to engage in talks for acquiring a stake in Tullow Oil’s Lokichar oil field in Kenya. This collaboration comes after IndianOil withdrew from the project, while reports suggest that China’s Sinopec has expressed interest in the $3.5 billion venture.
In March 2022, IndianOil initially expressed interest in acquiring a stake in the Lokichar oil field project. However, their discussions with Tullow Oil gradually diminished, possibly due to concerns regarding the scale of the project and the associated investments. In light of this, Oil India has now stepped in to explore the opportunity.
The Indian consortium aims to acquire a 50% stake held collectively by Tullow Oil, Total of France, and Africa Oil in the Lokichar oil field. Presently, Tullow Oil possesses a 50% stake, while Total of France and Africa Oil hold 25% each.
The Lokichar oil field, located in the Turkana region of Kenya, is considered a significant asset with vast untapped oil reserves. It has the potential to be a lucrative investment for companies seeking to expand their presence in the African oil and gas sector.
ONGC Videsh, with its extensive experience in overseas investments and oil exploration, is well-positioned to support Oil India in this pursuit. The partnership between the two Indian state-owned oil companies strengthens their collaborative efforts and leverages their collective expertise to explore new growth opportunities.
The entry of Sinopec, China’s state-owned oil and gas company, into the discussions adds a new dimension to the negotiations. The reported interest from Sinopec signals the competitive nature of the project and underscores the global significance of the Lokichar oil field.
The involvement of Indian companies in this venture aligns with India’s strategic objective of securing energy resources to meet its growing domestic demands. Kenya, with its substantial oil reserves, offers an attractive opportunity for Indian firms to diversify their energy sources and strengthen bilateral trade relations between the two nations.
Acquiring a stake in the Lokichar oil field would provide Oil India and ONGC Videsh with access to significant oil reserves and the opportunity to contribute to Kenya’s growing oil and gas sector. Furthermore, it would support Kenya’s economic development by attracting foreign investment and fostering collaboration in the energy industry.
Initially, IndianOil had displayed interest in acquiring a stake in the Lokichar oil field project back in March 2022. However, their involvement gradually diminished as talks with Tullow Oil faltered, potentially due to concerns regarding the project’s scale and associated investments. In light of this, Oil India has stepped up to explore the opportunity alongside ONGC Videsh.
The joint consortium aims to secure a 50% stake held collectively by Tullow Oil, Total of France, and Africa Oil in the Lokichar oil field. Presently, Tullow Oil holds a 50% stake, while Total of France and Africa Oil possess 25% each.
The Lokichar oil field, situated in Kenya’s Turkana region, represents a significant asset with extensive untapped oil reserves. It holds the potential to be a highly profitable investment for companies looking to expand their presence in the African oil and gas sector.
However, the negotiations for acquiring the stake are likely to be complex, involving intricate financial and technical considerations. Factors such as investment size, project viability, and future production potential will play crucial roles in determining the final outcome of the talks.
As the discussions progress, it is essential for the Indian consortium to carefully evaluate the risks and rewards associated with the Lokichar oil field project. Thorough due diligence, strategic planning, and close collaboration between Oil India, ONGC Videsh, and other stakeholders will be instrumental in achieving a successful outcome.
The pursuit of a stake in the Lokichar oil field by Oil India and ONGC Videsh demonstrates India’s commitment to exploring new avenues for energy security and expanding its global presence in the oil and gas sector. The outcome of these talks will not only impact the participating companies but will also shape the future trajectory of India-Kenya relations and India’s engagement in Africa’s energy landscape.
