Kenya to award 17 new oil and gas exploration blocks

May 21, 2016 12:00 AM

The Kenya government has said it will directly award 17 newly demarcated blocks for the exploration of crude oil and natural gas to international prospecting companies.

The Ministry of Energy said it will use a first-come, first-served basis to negotiate the production sharing agreements (PSAs) for exploration before going into competitive bidding in 2017.

Uganda is expected to award the licences of six exploration blocks in the Albertine basin by the end of next month.

Kenya's Petroleum Principal Secretary Andrew Kamau said 17 new blocks have been demarcated in order to reduce acreage and accelerate the pace of seismic surveys in identifying oil and gas deposits.

"Sessional Paper No 4 of 2005 on energy provides for the reduction of block sizes to curb the tendency by companies to hoard them while carrying out work on very small parts of entire acreage," he said.

Revision of blocks

The first blocks were deemed too large, covering about 20,000 square kilometres. The first revision was done in 2006, when the blocks were increased from 25 to 37. The second revision was in 2013, and the number of blocks went up to 46.

Mr Kamau said the PSAs for the new blocks will be signed after exploration terms are negotiated and new acreage is delineated by the Survey Department subdividing existing blocks or merging areas that have been surrendered.

"Firms can retain the portion of the block deemed valuable, and surrender 25 per cent of the original contract area at or before the end of the initial exploration period of two years for onshore and shallow offshore, and three years for deep offshore," he said.

Kenya will hold competitive tendering for the blocks from 2017. The framework for the bids will require high quality seismic data on the prospective blocks to be packaged and offered to potential investors.

The National Oil Corporation of Kenya will carry out a survey to gather seismic data on potential oil and gas areas.

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