From British exit to Kenyan ownership
Gulf Energy entry follows Tullow troubled withdrawal from Kenya after years of mounting debt. The British firm sold its entire stake to Gulf Energy parent entity in a $120 million transaction completed in September 2025.
Tullow departure came after Kenya Energy Ministry rejected the company earlier field development plan, citing insufficient financial backing. French energy giant TotalEnergies and Canada Africa Oil had already exited in 2023.
Energy and Petroleum Cabinet Secretary Opiyo Wandayi approved Gulf Energy Field Development Plan in November 2025. The plan now awaits parliamentary ratification, expected to conclude within 90 days.
Fiscal terms and government revenue projections
Under the revised Production Sharing Contract framework, Kenya stands to earn between $1.05 billion and $2.9 billion over the project 25-year lifespan, depending on global oil prices ranging from $60 to $70 per barrel.
Gulf Energy has proposed a 50-50 profit-sharing arrangement during the initial production phase through 2031. The split would shift progressively in Kenya favour, eventually reaching 75-25 favouring the government at peak output. A 26% windfall tax would activate when oil prices exceed $50 per barrel.
The revised agreement allows Gulf Energy to recover up to 85% of annual crude output as cost oil, up from 65% in previous contracts. Kenya has granted tax exemptions including waivers on value-added tax, withholding taxes, railway development levies and import declaration fees.
“The project-specific fiscal measures outlined in the Field Development Plan are essential to meeting the investment and bankability thresholds required for a final investment decision,” Njogu explained.
Infrastructure challenges and transport strategy
One of the project most pressing challenges remains transporting crude from landlocked Turkana County to international markets. An earlier proposal for an 895-kilometre export pipeline to Lamu port has been shelved due to prohibitive costs.
Instead, Gulf Energy plans to rely initially on road transport, deploying trucks to move crude from South Lokichar to Eldoret, where it can be loaded onto Kenya metre-gauge railway for shipment to Mombasa. At 20,000 barrels per day, the company estimates requiring approximately 200 trucks daily.
Gulf Energy has lobbied the government to extend the railway from Eldoret to South Lokichar, roughly 200 kilometres. Railway transport would significantly reduce per-barrel costs compared to heavy truck traffic. In 2019, Tullow conducted a pilot programme trucking approximately 200,000 barrels to Mombasa for export, demonstrating logistical feasibility.
Gulf Energy executives have emphasized the urgency of moving forward, framing the decision as time-sensitive in a global energy landscape increasingly hostile to new hydrocarbon investments. International financial institutions are tightening criteria for fossil fuel projects in response to climate commitments.
“The current opportunity exists against the backdrop of a rapidly evolving global energy landscape, where the window for financing new upstream oil projects is narrowing,” Njogu told lawmakers. “Frontier oil projects such as South Lokichar must demonstrate strong economics, robust fiscal stability and timely decision-making to remain competitive for capital.”
Uganda, Kenya neighbour, is advancing its own Lake Albert oil development with a 1,443-kilometre pipeline to Tanzania coast scheduled for completion in 2025.
Local content and community commitments
Gulf Energy Field Development Plan emphasizes local content requirements and community engagement. The company has committed to a “ring-fenced Local Content Strategy” designed to maximize employment and business opportunities for Turkana County residents.
Turkana County, one of Kenya poorest regions, has watched oil exploration activities for more than a decade with minimal tangible benefit to date. Community leaders have expressed cautious optimism about Gulf Energy commitments.
Flanked by Group Chief Executive Paul Limoh and Country Manager Franklin Juma during the parliamentary appearance, Njogu reiterated pledges to operate with transparency and in full compliance with Kenyan law and international best practices.
Kenya Parliament now faces the critical decision of whether to ratify the Field Development Plan and amended Production Sharing Contracts. Lawmakers have 90 days to complete their review.
The joint committee session chaired by National Assembly Energy Committee Chairman David Gikaria and Senate Energy Committee Vice Chairperson William Kisang signals the high-level attention the project has attracted. Some legislators have questioned whether the cost recovery provisions favour Gulf Energy too heavily.
Approval would clear the way for Gulf Energy to begin field development activities, including drilling additional production wells and constructing processing facilities. The 1 December 2026 production target gives the company approximately 21 months to complete preparations.
Success would position Kenya alongside Uganda and South Sudan as East Africa oil-producing nations, diversifying the economy and providing new revenue for infrastructure development. For Gulf Energy, the company has bet its future on the Turkana fields, a wager that will either establish it as a major regional energy player or become a cautionary tale of overambition in a sector where many have failed.
