Tullow Oil has announced plans to send several of its employees in the Kenyan unit packing to cut operational costs.

In a redundancy memo on Wednesday, the UK oil firm said it has had to review business operations to ensure resources are allocated in the most efficient way possible.

“Due to this review, it has become necessary to restructure the company with some roles becoming unnecessary,” Tullow Oil Kenya managing director Marin Mbogo said in a statement.

The company which has 650 employees in the country has promised to pay all the affected employees a redundancy package comprising up to date salaries, severance dues and accrued but untaken leave days.

The notice is coming just two weeks after an insider told an international media outlet that it was planning to exit the country amid uncertainty over the project’s launch.

Early on Wednesday, another source had told Nasdaq that the firm was planning to cut a third of its staff to slash its administration costs by a fifth, or around $20 million Sh2 billiond, after weak output in Ghana, delays in East Africa and lower-than-hoped-for oil quality in Guyana.

This, according to the unnamed source would allow Tullow to cut its annual net administration costs by around a fifth to $80 million (Sh8 billion).

After a string of production downgrades, Tullow expects its production to shrink to 75,000 barrels per day this year and to 70,000 from 2021.

Tullow has pushed back its full-year results to March 12, when further details of its restructuring are expected.

Last year, the oil multinational pushed its target for making the critical Final Investment Decision to 2020 after it emerged that, among other issues, the National Environmental Management Authority (Nema) had delayed its issuance of licenses.

The firm has faced several challenges since it started operation in Kenya in 2012. Last year, the firm was for instance in 2018  forced stop oilfields activities and halted trucking operations after protests by the local community over revenue sharing structure.

 

 

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