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Kenya: Seven More Firms Seek Licence for Gas Exploration
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Business Daily (Nairobi)
23 April 2008
Posted to the web 23 April 2008
Jim Onyango
Kenya's search for natural resources is set to intensify following the arrival of seven international firms seeking to prospecting for natural liquefied gas in the Coast Province.
The seven companies have applied to the Ministry of Energy to be allocated exploration blocks in Pate, Kwale District, where natural gas believed to be of commercial value was discovered 20 years ago.
The Government-controlled National Oil Corporation of Kenya (Nock), which is tasked with marketing Kenya's exploration blocks, says the natural gas would provide the country with a reliable source of low cost electricity.
"Seven gas exploration licences for oil and gas are being negotiated. Most of those companies are interested in exploring natural gas," said Sumayya Hassan-Athmani, the deputy Managing Director, Nock.
"If we succeed in getting gas we will use it to light up Kenya. It would be a cheap source of electricity," said Mrs Athmani.
Demand for clean-burning LNG - led by the United States, China and India- is forecast to triple by the end of the next decade due to economic growth and environmental concerns. Analysts say Kenya would be saved from the forecasted worldwide scramble for gas energy if it developed its own gas generation facilities.
If discovered, natural gas will help Kenya meet the growing demand for electricity and reduce the country's dependence on imported oil for electric power generation as it will provide an alternate, lower-cost and more reliable power source.
Tanzania has built gas processing facilities and is currently building a 300 kilometre pipeline network to transport natural gas from Songo Songo islands to Dar es Salaam where it will be used as the principal fuel supply for five gas turbine electricity generators. The project will produce reliable electricity for the national grid and also bring gas to other industrial users in Dar es Salaam.
Kenya's electricity generator, KenGen, says in its March 2007 report that it intends to convert its diesel plants and gas turbines to use liquefied natural gas as the main fuel for power generation to reduce operational cost. This would in turn reduce the cost of electricity sold to the national grid.
The Ministry of Energy is preparing to advertise for an expression of interest in the construction of LNG storage and re-gasification facility at the Coast.
Other than hydrogenation, KenGen has installed geothermal generation facilities in the Rift Valley where it is exploiting 128Mw out of the potential 2,000 Mw to generate power. Despite intense activities by international oil explorers, Kenya is yet to discover any oil reserves even after sinking over 40 wells in the last 10 years.
compared to Sudan which found massive oil stocks after sinking 78 wells. Woodside Energy which had partnered with Global Petroleum quit Kenya last year after it failed to hit any hydrocarbons-the main components of fossil fuels, which include petroleum, coal and natural gas.
Even though Kenya is yet to strike oil, explorers view Nairobi-because of its developed financial infrastructure- as their business operation centre in their search for oil resources in the east African region. Oil and gas have been discovered in Uganda and Tanzania respectively.
The international oil industries operating in the region have set up offices in Nairobi to take care of their regional businesses thereby making the city a hub for oil exploration in east Africa.
The exit of a major player-Australia's independent Woodside Petroleum which has been exploring the coast for oil reserves jolted exploration activities at the Coast.
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Woodside Petroleum abandoned its oil exploration activities in Kenya and three other Africa countries to concentrate in Liquefied natural gas business.
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