Kennedy Senelwa
16 August 2008
Nairobi — With the cost of crude oil hitting the $110 (Sh7260) per barrel mark recently, interest among exploration firms in Kenya - widely seen as an unexploited frontier - is at its peak.
The government has exploration agreements with Vangold Resources, Lundin Petroleum, Lion Petroleum Inc, Camex Resources and Turkana Drilling Consortium among others.
The agreements mean the firms will carry out geophysical and seismic surveys to map potential oil and gas deposits this year.
Energy Minister Kiraitu Murungi said Kenya is intensifying exploration activities as neighbouring Uganda, Tanzania and Sudan have found deposits of commercial hydrocarbons .
"We want to take the risk because it is worth it. Eventually, commercial fossil fuel deposits will be discovered in Kenya. East Africa is a fertile area for oil and natural gas," he said.
First well drilled
Kenya's search for crude oil dates back to the 1950s during the colonial era when exploration began, with the first well drilled in 1960.
The government entered a joint venture exploration programme with Petro-Canada International Assistance Corporation in 1986. Seismic work was conducted and Kencan-1 was drilled to test deeper strata on the structure adjacent to Garissa-1 well.
A group of companies led by Amoco and Total drilled 10 wells, eight of them in Anza basin and two in Mandera basin between 1985 and 1990. The wells were dry but with indications of oil and gas.
Kenya has not found hydrocarbons. Uganda plans to start exploiting crude oil found near Lake Albert region by 2009 while Tanzania already produces natural gas.
Harsh environment
Despite the post-election violence early this year, exploration firms did not give any plans to scale down or wind up operations of looking for oil deposits in Kenya.
International Crisis Croup says the firms were bound to carry out various activities in Kenya as they operate in all kinds of difficult environments throughout the world.
"Political violence in not enough to stop firms from operating. But direct threats or violence at times lead to work stoppage," said ICG's energy analyst Charles Esser.
Turkana Drilling Consortium received an exploration licence for blocks in Anza basin, close to the border with Sudan late last year. Last year, Lion Petroleum Inc of Canada signed a production sharing contract with the Kenyan Government to explore oil and gas in block 1 in Mandera basin.
Amenix PLC of Britain is spearheading exploration of crude oil and gas deposits under a similar contract with the ministry of Energy for block L17 and 18 along Kenya's coast.
Vangold Resources Ltd has block 3A while Sweden's Lundin Petroleum signed a contract for Block 10A. Vangold and Ludin also cover a large area in Anza basin, an extension of Sudan's Muglad basin that has major oil discoveries.
Vangold Resources of Canada is spending $3.5 million (Sh231 million) on various oil exploration activities ahead of exploratory well drilling in block 3A in Eastern Province.
The firm is reprocessing data on past exploration activities acquired from National Oil Corporation of Kenya at a cost of $500,000 (Sh3.3 bn) undertaking an in-fill seismic data.
"Data of past activities carried out is being reprocessed using new Canadian technology to establish leads of oil deposits," said geologist Francis Karanja.
He said reprocessing is to be finished before year-end and $3 million (Sh198 million) seismic survey to map potential oil wells is to be done in 2009 before exploratory well drilling in 2010.
Quality prone
Exploration in block 3A in Eastern Province conducted earlier in the late 1980s proved existence of excellent quality prone rocks, sandstone reservoirs and multitude of structural traps. Vangold is also prospecting in Lamu.
According to National Oil Corporation of Kenya, British Petroleum and Shell began exploration activities in 1954 in the Lamu Embayment where they drilled 10 wells.
"None of the wells were fully evaluated or completed for production despite several indications of oil staining and untested zones with gas shows," said NOCK's Managing Director, Mwendia Nyaga.
He said two companies carried out initial tests in Mandera basin that did not materialise into drilling programmes.
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