Local firms earn Sh3.7 billion from Turkana oil project
Published Mon, May 14th 2018 at 11:58, Updated May 14th 2018 at 12:05 GMT +3
NAIROBI, KENYA: Local suppliers to Tullow Oil’s Lokichar project in Turkana County raked in $37 million (Sh3.7 billion) last year, new data shows.
According to Tullow’s annual report to shareholders, this was 32 per cent more than the Sh2.8 billion it paid the suppliers in 2016.
The amount, however, was negligible when considered as a percentage of Tullow’s entire spend on local suppliers in the other markets it operates.
It was also lower than the amount the company paid to local businesses in 2014, when it spent $81.5 million (Sh8.2 billion).
“In Kenya, Tullow sustained the 2016 increase in the proportion of capital expenditure targeting local suppliers. In 2017, 30 per cent of our overall supplier spend was with Kenyan businesses, down marginally from 33 per cent in 2016, but with a higher absolute value due to increased expenditure related to the 2017 South Lokichar appraisal campaign,” said Tullow in the report.
The exploration firm procures a wide range of services from local companies, ranging from transportation to catering services for its team that based in Lokichar.
Tullow spent a substantially larger amount on its Ghanaian businesses, where it has started commercial production and export of oil.
It spent $194 million (Sh19.4 billion) in procuring goods and services from local businesses in the country last year.
“We have continued to promote improved access to supply chain opportunities for local firms, whether through pre-tender seminars in Ghana or targeted capacity development initiatives for local firms in Turkana County, Kenya,” said Tullow.
“In both countries, we have provided training to existing suppliers and have worked with contractors to build their awareness of the forward requirements of our development and production operations. In Ghana, we executed a six-month pilot scheme for placing a portion of our foreign exchange requirements with local banks.”
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The firm in its annual report for 2017 said it had undertaken a restructuring of the Kenya unit in a process that resulted in 22 employees being sent home.
The reorganisation also saw the oil company appoint Mark Macfarlane as the new executive vice president, East Africa, to oversee operations in Kenya and Uganda. Mr Macfarlane will primarily focus on Kenya following Tullow’s sale of its assets in Uganda and ceding of operator status to French oil major Total.
Martin Mbogo will be in charge of Tullow Kenya as managing director reporting to Mr MacFarlane.
Mr Mbogo was previously the country general manager in Kenya. The firm said Mbogo would play a critical role in leading and overseeing Kenya’s transition into an oil-producing nation.
Despite the laying off of the local employees, Tullow said it was intent on getting locals to hold senior positions.