Oil and gas discoveries make East Africa a rich hunting ground

Dec 31, 2012 12:00 AM

East Africa’s oil and gas potential has been compared to the gold rush in South Africa —where production of the commodity went from zero in 1886 to 23 per cent of the global supply in just 10 years.

As the scrambles for new blocks in Kenya continues, experts believe there is a high probability of a gas find along the East African coastline which shares the same geological formation with some of the gas-rich blocks in Tanzania and Mozambique.

While interest in Kenya’s exploration blocks has risen since UK firm, Tullow Oil, announced two successful oil-finds in Turkana County within the Tertiary Rift Basin, several multinational oil exploration companies are set to begin bidding for five or more new offshore oil and gas exploration sites in Kenya in the coming weeks.

Ministry of Energy officials have asked the Director of Survey to speed up the mapping of new offshore areas to facilitate the publication of sites and award acreage to prospecting firms.

Officials say it expects five new offshore sites as the country and the East Africa sees a significant increase in exploration in recent years. Oil major Shell already has interests in Tanzania, and the acquisition of Cove would mark the entry by PTTEP of Thailand into Kenya and Mozambique.

The prospects have been mapped in four sedimentary basins—Lamu, Anza , Mandera and the Tertiary Rift .

International firms are expected to negotiate with the government for rights to explore acreage in water depths of between 3,000 and 4,000 metres, quite an expensive undertaking by mainly medium and large-sized firms.

The twin discoveries in Turkana County confirms that there is a working hydrocarbon system in the country and marks the beginning of a long way journey in the oil and gas lifecycle.

The regional gas boom has attracted a long list of players including super majors (ExxonMobil, Total and Royal Dutch Shell), large international E&Ps (Anadarko and BG Group), hybrid IOC/NOCs (Statoil, Petrobras and Galp Energia) and smaller regional specialists (Tullow, Ophir Energy/Dominion, Cove Energy, Pancontinental Oil & Gas NL and Premier Oil).

Kenya’s oil search has attracted more than 23 players since March, among them US giant Anadarko Corp, with the company holding stakes in five blocks off the country’s coast.

Anadarko Petroleum Corp previously known as Algeria’s number one independent producer made significant gas discoveries offshore Mozambique in early 2012 and has branched out into other regions of Africa. Two wells— Kiboko prospect in block L11B and the Kubwa prospect in block L7 will be its first in Kenya. The company is the operator of blocks L7 and L11B, holding 45 per cent of the licences in each.

Meanwhile, Total has a 40 per cent stake, with Cove Energy holding the remainder.

“We are now preparing Anadarko to start drilling in late 2012 or early 2013. I guess next year I’ll be talking about billions of barrels discovered in Kenya,” added Mr Nyoike.

Overall, the Ministry of Energy expects to drill at least a dozen more wells onshore and offshore in the new year as Kenya aims to stake a bigger claim on profits from its natural resources exploration boom. The country is seeking 25 per cent stake in the production activities of oil and gas companies operating here.

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