Kenya ....Kenya: Big Companies Scramble for Black Gold Prospects
The Nation (Nairobi)
16 August 2008
Posted to the web 17 August 2008
Kennedy Senelwa
Nairobi
Withthe cost of crude oil hitting the $110 (Sh7260) per barrel markrecently, interest among exploration firms in Kenya - widely seen as anunexploited frontier - is at its peak.
Thegovernment has exploration agreements with Vangold Resources, LundinPetroleum, Lion Petroleum Inc, Camex Resources and Turkana DrillingConsortium among others.
The agreements mean the firms will carry out geophysical and seismic surveys to map potential oil and gas deposits this year.
EnergyMinister Kiraitu Murungi said Kenya is intensifying explorationactivities as neighbouring Uganda, Tanzania and Sudan have founddeposits of commercial hydrocarbons .
"We wantto take the risk because it is worth it. Eventually, commercial fossilfuel deposits will be discovered in Kenya. East Africa is a fertilearea for oil and natural gas," he said.
First well drilled
Kenya'ssearch for crude oil dates back to the 1950s during the colonial erawhen exploration began, with the first well drilled in 1960.
Thegovernment entered a joint venture exploration programme withPetro-Canada International Assistance Corporation in 1986. Seismic workwas conducted and Kencan-1 was drilled to test deeper strata on thestructure adjacent to Garissa-1 well.
A groupof companies led by Amoco and Total drilled 10 wells, eight of them inAnza basin and two in Mandera basin between 1985 and 1990. The wellswere dry but with indications of oil and gas.
Kenyahas not found hydrocarbons. Uganda plans to start exploiting crude oilfound near Lake Albert region by 2009 while Tanzania already producesnatural gas.
Harsh environment
Despitethe post-election violence early this year, exploration firms did notgive any plans to scale down or wind up operations of looking for oildeposits in Kenya.
International Crisis Croupsays the firms were bound to carry out various activities in Kenya asthey operate in all kinds of difficult environments throughout theworld.
"Political violence in not enough tostop firms from operating. But direct threats or violence at times leadto work stoppage," said ICG's energy analyst Charles Esser.
TurkanaDrilling Consortium received an exploration licence for blocks in Anzabasin, close to the border with Sudan late last year. Last year, LionPetroleum Inc of Canada signed a production sharing contract with theKenyan Government to explore oil and gas in block 1 in Mandera basin.
AmenixPLC of Britain is spearheading exploration of crude oil and gasdeposits under a similar contract with the ministry of Energy for blockL17 and 18 along Kenya's coast.
VangoldResources Ltd has block 3A while Sweden's Lundin Petroleum signed acontract for Block 10A. Vangold and Ludin also cover a large area inAnza basin, an extension of Sudan's Muglad basin that has major oildiscoveries.
Vangold Resources of Canada isspending $3.5 million (Sh231 million) on various oil explorationactivities ahead of exploratory well drilling in block 3A in EasternProvince.
The firm is reprocessing data onpast exploration activities acquired from National Oil Corporation ofKenya at a cost of $500,000 (Sh3.3 bn) undertaking an in-fill seismicdata.
"Data of past activities carried out isbeing reprocessed using new Canadian technology to establish leads ofoil deposits," said geologist Francis Karanja.
Hesaid reprocessing is to be finished before year-end and $3 million(Sh198 million) seismic survey to map potential oil wells is to be donein 2009 before exploratory well drilling in 2010.
Quality prone
Explorationin block 3A in Eastern Province conducted earlier in the late 1980sproved existence of excellent quality prone rocks, sandstone reservoirsand multitude of structural traps. Vangold is also prospecting in Lamu.
Accordingto National Oil Corporation of Kenya, British Petroleum and Shell beganexploration activities in 1954 in the Lamu Embayment where they drilled10 wells.
"None of the wells were fullyevaluated or completed for production despite several indications ofoil staining and untested zones with gas shows," said NOCK's ManagingDirector, Mwendia Nyaga.
He said two companies carried out initial tests in Mandera basin that did not materialise into drilling programmes.