Kenya earned $1.915 million (Sh247.9 million) in royalties from the export of crude oil from Turkana under the Early Oil Pilot Scheme (EOPS). Despite the good results from EOPS, the country’s plans to start commercial oil production are still facing major hiccups.

Royalty Earnings from Turkana Oil Blocks

British oil firm Tullow Oil, which led the exploration and pilot export efforts, disclosed that the royalty payments were made in 2024. The payments were distributed as follows:

  • Block 10BB: $1.103 million (Sh142.83 million)

  • Block 13T: $674,000 (Sh87.2 million)

  • Block 10BA: $138,000 (Sh17.8 million)

These payments represent almost half of the total revenues Tullow earned from selling Turkana oil during the pilot phase.

About EOPS

Launched in June 2018, EOPS was meant to test the international market for Kenya’s oil and prepare the country for large scale production. During EOPS, Tullow and its former partners—Africa Oil and Total—exported 350,000 barrels of oil, earning approximately $4 million (Sh516 million).

The oil was shipped to India and China, and we thought we could go commercial in two years.

What are Oil Royalties?

Royalties are payments made by oil and gas companies to governments in exchange for extracting natural resources. The terms are set out in Production Sharing Contracts (PSCs) and vary from project to project. In Kenya’s case these payments are key to turning natural resource wealth into national revenue.

Setbacks and Delayed Commercialisation

We have not gone commercial more than four years after EOPS ended. Several issues have stalled the project:

  • Investor pull-out: Both Africa Oil and Total pulled out of the Turkana project in May 2023, surrendering their 50% stake. They cited concerns about the project’s commercial viability.

  • Approval delays: Government has not approved the Field Development Plan (FDP) which is critical for commercialisation.

  • Financing challenges: Kenya and Tullow struggled to get investors to fund infrastructure like pipelines and processing facilities.

Tullow had planned to go commercial in 2020, then 2024 and now it’s uncertain.

Kenya’s Share of Global Royalties

Tullow said the royalties paid to Kenya was 7.31% of its total global royalties which was $26.17 million in 2024. That’s a small share, a missed opportunity due to delays.

Tullow Exits the Project

Last month Tullow Oil exited the Turkana oilfields after completing a deal with Gulf Energy. Under the agreement Tullow will get three payments with the last payment by June 2033.

This comes just months after Tullow wrote off Sh18.86 billion ($145.4 million) for 2024 and Sh2.32 billion ($17.9 million) for 2023—both huge losses from the Kenyan operations.

What’s next for Kenya’s oil dream?

Kenya is supposed to approve the Field Development Plan by next month but that timeline is now in jeopardy with the change of ownership of the project. We had thought we would get billions of dollars from crude exports but so far bureaucratic delays, investor exits and feasibility concerns have made this a mirage.