Tullow Oil Plc, an Africa-focused explorer headquartered in London, has agreed to sell its Kenyan business to Nairobi-based Gulf Energy Ltd for at least $120mn, effectively ending its upstream operations in the country, the company announced on April 15.

The deal involves the sale of Tullow Kenya BV, which holds Tullow’s entire interest in the Lokichar oil project in Turkana. Under the agreed terms, Gulf Energy will pay $40mn upon completion, a further $40mn by June 2026 or earlier if the Field Development Plan (FDP) is approved, and a final $40mn in instalments between 2028 and 2033.

Tullow will retain a no-cost option to re-enter the project with up to a 30% stake in future development phases and could earn royalties based on production and oil prices.

Tullow, listed in London and Accra, has been divesting non-core assets to reduce debt and focus on operations in Ghana, Côte d’Ivoire, and Gabon, where it recently sold assets for $300mn.

“This transaction marks another step forward in Tullow’s accelerated deleveraging journey with near-term cash receipts of $80mn and mitigating significant capital exposure,” said Richard Miller, the company’s chief financial officer and interim CEO. “We look forward to working with Gulf Energy, who have the requisite financing to complete the transaction and are a strong and credible counterparty.”

Gulf Energy is a privately-owned Kenyan energy and infrastructure firm involved in petroleum trading, power generation, and engineering. It is the largest supplier of refined petroleum products into Kenya and inland East Africa.

The Lokichar project, discovered in 2012, holds an estimated 560mn barrels of recoverable oil, according to a 2021 Competent Person’s Report by GaffneyCline. Progress has stalled for years due to capital constraints and partner exits. By transferring full control to a regional player, Kenya’s upstream ambitions may gain new momentum. The deal also aligns with a broader trend of African energy assets shifting from global majors to regional firms.

The agreement is subject to regulatory approvals and the finalisation of a full sale and purchase agreement in the coming months. The first payment is scheduled for 2025.

Established in the late 1980s, and initially focused also on exploration in the UK and South Asia, Tullow experienced significant growth in the 2000s through acquisitions and major discoveries, including the Jubilee field in Ghana, producing assets in Gabon and Côte d’Ivoire, and a discovery in Kenya, reaching a market value of nearly $22bn by 2012.

However, the explorer has faced setbacks owing to operational challenges, underwhelming exploration results, leadership changes and waning investor interest as attention shifted globally towards the energy transition.

In Kenya, after repeated setbacks, Tullow said in March 2024 it would write off $17.9mn worth of its assets in the East African country on the uncertainty over attracting a strategic investor and commercial exploitation of the Turkana oil deposit.

As bne IntelliNews reported, Kenya plans to resume licensing oil companies to explore oil and gas in September 2025, seeking to attract international investors, unveiling a strategy to overcome setbacks tied to the stalled Lokichar Project and will conduct geological surveys across 3,600km². The effort targets untapped reserves, including gas prospects in Blocks 9, L4, and L8, spanning Marsabit, Garissa, Lamu and Kilifi counties.