Oil firms scramble for eight new offshore blocks in Kenya, East Africa

Several global exploration firms are expected to begin bidding for eight new offshore oil and gas exploration sites in Kenya in coming weeks.

This follows a move by the Ministry of Energy to publish an official gazette notice of eight new offshore sites.

While the government had indicated in March that it was marking out the eight blocks, delays in gazetting the sites meant the blocks could not be leased out.

The gazette notice brings the total number of exploration blocks in the country to 46.

Major natural gas finds in the past three years, mainly in Tanzania and Mozambique, have increased investor interest in East Africa’s offshore blocks.

Experts believe there is a high probability of a gas find in Kenya because its coastline shares the same geological formation with some of the exploration blocks found in Tanzania.

Increased activity in the oil and gas exploration business is expected to come as good news to Kenya as the country seeks to reduce its fuel imports.

The firms are expected to negotiate with the government for rights to explore acreage in water depths of between 3,000 and 4,000 metres.

Interest in Kenya’s exploration blocks has risen since UK firm Tullow Oil announced the country’s first oil discovery in Turkana in March. The announcement resulted in firms listed on the New York and London stockexchanges such as Premier Oil and Apache Oil staking a claim in Kenya’s exploration business even as smaller players such as Cove, Origin Oil, and Pancontinental heightened their exploration work.

Total of France is said to be negotiating with the government for a Production Sharing Contract for one of the new blocks L22. Apache Corporation, ExxonMobil and Anadarko Petroleum Corporation of the United States, Royal Dutch Shell, Statoil of Norway and Petronas of Brazil are among firms interested in exploring the new sites.

Kenya’s Petroleum Commissioner Martin Heya said discussions with prospecting firms seeking to be awarded new acreage will be on a first-come first-serve basis. “We want to award acreage to firms that have technical and financial capabilities” said Mr Heya.

The entry of multinational prospectors with greater financial muscle has seen smaller players like Cove, Origin Oil, and Pancontinental either exit the scene or remain with minority interests through buyouts.

The Ministry of Energy in December 2011 asked the Director of Survey to expedite the survey work of new offshore areas to facilitate the publication of sites and award acreage to prospecting firms.

Total wants the L22 acreage to increase its presence in Kenya. Last year the firm announced its acquisition of 40 per cent interest in areas L5, L7, L11A, L11B and L12 subject to approval by Kenyan authorities.

By KENNEDY SENELWA
The East African Newspaper
05-May-2012