All eyes on Gulf Energy as Tullow seals Kenya assets sale deal

Tullow Oil has completed the sale of its Kenya assets to Gulf Energy Ltd, shifting the pressure to realise Kenya's oil dream to the local firm.

The $120 million (Sh15.5 billion) deal marks the exit of the London-based firm from the country.

“After 14 years in Kenya, Tullow leaves behind strong assets, and we are delighted to pass the baton to Gulf Energy, a capable Kenyan company in the lead up to first oil, making Kenya an oil-producing country,” said Tullow Kenya BV Managing Director Madhan Srinivasan in a statement on Friday.

While new to the upstream segment of the industry, Gulf Energy has been a key player in Kenya’s petroleum industry. Previously, it sold fuel through a retail chain that was, however, sold to Rubis.

It is, however, a major player in the import of petroleum products and would win tenders to import large fuel cargoes in the Open Tender System (OTS), which has since been replaced by the Government-to-Government system, where Gulf is still a major player.   

Gulf Energy Chief Executive Paul Limoh said the project will play an important role in advancing Kenya’s domestic energy sector, creating opportunities for growth and development in the Turkana region, as well as supporting the country’s long-term energy security.

Sector players, however, observed that Gulf’s could be a speculative investment, and have questioned its capability to raise the $2 billion (Sh258 billion) needed to move the project to the commercial phase.

Further, they argue that Tullow’s exit could be an indicator that no strategic investor was willing to come on board.

“It’s a speculative investment in the hope that either technology enables them to set up a modular refinery that enables them to refine in Lokichar and then distribute locally,” a source who sought anonymity told Weekend Business.

The announcement of the successful completion of the sale of its entire working interest in Kenya to Auron Energy E&P Ltd, an affiliate of Gulf Energy Ltd, followed the satisfaction of all conditions precedent under the Sale and Purchase Agreement (SPA) announced on July 21, 2025.

In a press release published on the London Stock Exchange, Tullow has confirmed receipt of the full proceeds of Tranche A $40 million (Sh5.1 billion) under the terms of the SPA.

“The transaction represents the sale of 100 per cent of the shares in Tullow’s subsidiary Tullow Kenya BV, which holds Tullow’s entire working interests in Kenya, for a minimum cash consideration of $120 million, subject to customary adjustments,” Madhan said.

He added that the transaction proceeds will be used to strengthen Tullow’s balance sheet. While this sale marks a shift from foreign to domestic control, potentially easing nationalist concerns, Tullow will retain royalty payments, subject to certain conditions, and a no-cost back-in right for a 30 per cent participation in potential future development phases.

Gulf Energy, Kenya's largest refined products trader, advances toward first oil -potentially by 2028.

Since the 2012 discovery of commercially viable oil reserves (estimated at 560 million barrels) by Tullow Oil in the South Lokichar Basin, the prospective oil wealth sparked national excitement, promising poverty alleviation and development.

However, over a decade later, the project has stalled, fueling a narrative of broken promises and deepening inequality. Also, full-scale production and export have been significantly delayed by technical challenges, funding issues, and the withdrawal of international partners like TotalEnergies and Africa Oil.

In 2023, President William Ruto blocked the sale to the Indian state-owned company, Oil and Natural Gas Corporation (ONGC), over national interest concerns and imposed strict conditions on ownership changes.

In May 2024, three state-owned Gulf firms that import fuel to Kenya on credit earned Sh1.5 trillion in two years. This was after the Kenyan government renewed the contract to 2028, in a race to meet volumes of fuel it promised to buy under the deal.

Kenya's government-to-government (G-to-G) agreement with three state-owned Gulf companies was established to stabilise the economy and strengthen the Kenyan shilling. The deal allows the import of refined petroleum products and LPG with a 180-day deferred payment plan.