Writes Leo Odera Omolo
SEVERAL multinational oil exploration companies are expected to begin bidding for eight new offshore oil and gas exploration sites in Kenya I the coming weeks.
According to the reports appearing in the local media, 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 this year 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 a total of 46.Major natural gas finds in the past three years mainly in Tanzania and Mozambique have increased investors interest in Africa’s offshore blocks.
Meanwhile other report says that the Royal Dutch Shell has agreed to buy in cash-money, the exploration interests of London based Cove Energy Plc, East Africa for USD 1.8 billion.
The cash offer will enable Royal Dutch Shell to gain entry into the East African region, which is at the center of global interest due to the recent years.
“East Africa has seen a significant increase in exploration activity in recent years. Shell already has interests in Tanzania, and the acquisition of Cove would mark Shell entry into Kenya and Mozambique.
Shell’s latest offer is subject to receiving written consent from Mozambique’s mineral resources Minister. The Anglo-Dutch firm has a 50 per cent interest in offshore exploration areas five and six with a depth of 3,000 meters in Tanzania.
In February, Thailand state-owned PTT topped Exploration and Production {PTTEP} topped off Shell’s initial offer to buy Cover Energy, sparking a takeover battle for the acquisition of the London Stock Exchange listed company.
PTTEP announced it would offer USD 1.77 billion for Cove, which was a premium of some USD 200 million, to counter Shell’s earlier offer of USD 1.57 billion.
Cove Energy Plc has a 8.5 interest in Mozambique’s Ruvuma offshore area one; and a 10 per cent stake in Ruvuma offshore.
In Kenya, Cove Energy Plc has a 10 per cent in offshore area 1.5,10 per cent in 17;25 per cent in 1.10A;;15 per cent in1.10B and a 10 per cent in 1.11A.
“Shell will make an excellent partner in the Ruvuma liquefied natural gas project given its extensive project given its extensive project development experience,” said Cove’s executive chairman Michael Elaha.
In the case of the new scrambles for the new offshore blocks in Kenya experts believe there is a high probability of a gas find in Kenya because its coastline shares the same geological formation with some 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 meters.
Interest in Kenya’s exploration blocks has raised since UK firm Tullow Oil announced the country’s first oil discovery in Turkana in March this year. The announcement resulted in firms listed on the New York and London stock exchanges such as Premier Oil and Apache Oil staking a claim in Kenya’s exploration business such as Cove Origin Oil, and Pan-continental heightened their exploration work.
Total France is said to be negotiating with the government for Production Sharing Contract for one of the new blocks 1.22 Apache Corporation. Exxon Mobil 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 muscle has seen smaller players like Cove, Origin Oil and Pan-continental either exit the scene or remain with monitoring interests through buyouts.
Kenya’s Ministry of Energy in December 2011asked 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 1.22 acreage to increase its presence in Kenya. Last year, the firm announced its acquisition of 40 per cent interest in areas 1.5, L.7,1.11A, 111B and 1.22 subject to approval by Kenya authorities.
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