20, August 2013

Oil and Gas Exploration Intensifies in East Africa

East Africa has become a major focal point for oil and gas exploration after discoveries in Uganda, Kenya and Tanzania. While the Seychelles and Mauritius have revealed plans to work together to search for petroleum in an area of the Indian Ocean they both own, according to Reuters.
Tullow Oil, Kenya’s main prospector and explorer, has indicated that it could start harvesting oil as early as the second half of 2014 if things work according to plan. Kenya’s deposits are estimated to produce 10 billion barrels, which is more than three times that of the United Kingdom’s reserves. Once the oil pipeline is installed, Tullow plans to supply around 500,000 barrels of oil a day by 2018. The company also indicated that further discoveries could be made and harvesting speed could be increased.
Tullow has several wells in operation for exploration in the East African Rift System. These include Ngamia-1, Etuko-1 and Twiga-1, which after testing have shown potential for 5,000 barrels of oil a day. Exploration drilling commenced in January 2012 at the Ngamia-1 well, which was then followed by the Twiga South-1 well. All flow tests were completed in February and last month.
During the last six months, Tullow has experienced considerable profits. Chief Executive Aidan Harvey said, “Tullow continued to perform well in the first half of 2013. Our exploration-led growth strategy delivered major successes in Kenya and Ethiopia, further enhancing East Africa as a new oil region. We have six exciting exploration campaigns under way in the second half in 10 countries with 20 wells.”
The oil exports are being pushed by the Kenyan government, who wish to overtake neighbours Uganda and the Democratic Republic of Congo, whose resources had attracted several explorers, such as China’s Cnooc Ltd. and France’s Total SA. Currently there are 14 companies involved in petroleum exploration activities in Kenya and they occupy 26 out of a total of 38 exploration blocks (68%). The same number of petroleum-sharing contracts has been granted. Some of the companies involved include; Africa Oil Corporation, Anadarko/Global Dynamic, British Gas Group, Lion Petroleum, Flow Energy, National Oil, Apachel Origin Energy, Dominion, Simba Petroleum, and Vanoil Resources.

At present, over 32 wells have been drilled in the country with 17 located in Lamu Basin, 11 in Anza Basin, 2 in Mandera Basin and 2 in the Tertiary Rift. Of these, 20 had hydrocarbon shows with more than seven known oil seeps spread throughout the four basins. This confirms that all four Kenyan sedimentary basins possess mature hydrocarbon regimes capable of accumulating economical reserves where sub-surface rocks, reservoirs and traps do occur in the right combination to denote the potential for oil production. Yet Kenyan Petroleum Commissioner, Martin Heya stated that’ “They are not drilling enough wells.” “Uganda drilled a long time ago, but it’s possible that we can produce earlier than anybody else. We shall be happy.” Kenya currently imports all its fuel, almost 80,000 barrels of oil a day at a cost of more than USD 8.0m a day, (according to U.S. government data). In Uganda, Tullow Oil is facing delays as the government and oil companies are still negotiating the terms of production after 1.7bn barrels of oil were discovered. Oil from landlocked Uganda will eventually be exported through Kenya.