* Kenya resource volume estimate raised to 300 mln barrels
By Andrew Callus
LONDON, July 31 (Reuters) - Tullow Oil said a new drilling success at the Etuko-1 well in Kenya confirms the commercial value of fields there and predicted a pipeline picking up Ugandan crude too could deliver 500,000 barrels a day of new output.
That amount - probably delivered to the east-coast port of Lamu near the border with Somalia - would boost sub-Saharan African output by 8 percent, from around 6.2 million barrels now. It is equivalent to all the lost production from troubled top exporter Nigeria over the past three years.
Tullow has said in the past it hopes to see a 250,000-barrels-a-day pipeline from Uganda’s Lake Albert region, where the company is also drilling, with a view to first deliveries by 2018. It has also raised the possibility of a tie-in to its Kenyan prospects.
In June, Uganda’s President Yoweri Museveni and Kenyan President Uhuru Kenyatta agreed to cooperate on a pipeline route that could also eventually ship oil from South Sudan.
The Etuko-1 result, added to two other wells, raises Tullow’s estimate of resource volumes in the Lokichar basin in Kenya’s northwest to 300 million barrels from 250 million.
A Kenya-Uganda pipeline with a total length of 1,300 to 1,400 km (800-870 miles) could be a reality “at a similar date (2018)”, said Paul McDade, the company’s chief operating officer.
“When you start to take into account the potential of Kenya, and Lokichar is just the first component of what Kenya could be, it could be much more material than 250,000 barrels a day. It could easily be 500,000 barrels a day or even beyond depending on the exploration success we continue to have in Kenya.”
Kenya could also envisage exporting oil as early as 2016 by rail and road, McDade said.
“We are highlighting the ability to get focused on development early... (but)... It’s early days. We are only initiating discussions with the Kenyan government” on how to develop its reserves, he said.
“We have 90-plus exploration prospects yet to drill in Kenya so there’s a long way to go before we’d understand the full value of this acreage.”
Tullow is principally an explorer that seeks to bring in investors with deeper pockets for the development stage of its projects. Its partner in Etuko-1 is Africa Oil.
Tullow’s upbeat assessment on Kenyan prospects came as it reported first-half 2013 net profit that fell to $313 million from $567 million, in line with expectations, and as cash flow and revenue reached record levels.
A payment by new partners for a share in its Ugandan operations boosted earnings a year earlier, and this was only partly offset by lower exploration writedowns in the 2013 half, Tullow said.
Tullow also confirmed on Wednesday that it will seek a “development carry” from any future partner in its Ten project in Ghana, under which the new investor would pay development costs.
Tullow put the increased cost of developing Ten at $4.9 billion, excluding lease costs for floating production, storage and offloading (FPSO) vessels.
Tullow shares were the strongest performer in the Dow Jones Stoxx 600 index of European oil stocks on Wednesday, climbing 1.9 percent to 1,046 pence.