Kenyan authorities are angry with multinational oil and gas explorers who make major announcements of discovery of the hydrocarbons before informing the ministry of energy as outlined in their prospecting licenses as filing of returns. A ministry official who can not be quoted in the absence of express authority from seniors said the announcement by Australia's Pancontinental Oil & Gas company that natural gas had been found in Mbawa1 well was not communicated to the Kenya government.
The company holds 15 percent share of the license for the block L8 prospect where the Mbawa1 well is located 70 kilometers off the Malindi coast. Pancontinental had the previous day requested Australia's securities exchange to halt trading of its shares to await a major announcement, which turned out to be the natural gas discovery in Kenya.
Yesterday, the company's share price shot up 70 percent to A$0.19 after the announcement in Australia bourse, valuing the company at around $220 million, while shares in its much bigger partner, Tullow, were down 0.5 percent at 1397 pence by 0900 GMT. The announcement of Tullow oil's discovery of oil in Turkana at Nagmia well was also leaked to the foreign media outlets before the returns were filled with the ministry of energy.
Pancontinentals announcement yesterday said that large natural gas deposits have been discovered in Kenya. According to Britain's Tullow Oil and Australia's Pancontinental Oil & Gas companies which own 15 percent each in the blocks L8 license consortium, the gas was found in about 52 metres vertical stretch.
At the time of the announcement, drilling had reached a depth of 2,553 metres of the total target depth of 3,275 metres. This gas was found at the shallowest estimated hydrocarbons target depth by drilling operator Apache Corporation of the U.S which holds a 50 percent interest.
The lucky strike came after 29 days of drilling, out of the planned 60 day operation, in which the company hopes to have completed its drilling works. "With drilling continuing to a deeper exploration target, these interim results may be the first part of the story in this well, and they are certainly just the beginning of the main story of oil and gas exploration offshore Kenya," said Pancontinental's chief executive Barry Rushworth.
This becomes the first natural gas discovery in Kenyan territory. A series of recent discoveries offshore Tanzania and Mozambique have raised interest among world's oil and gas exploration majors in the previously ignored East African region. Last month, the U.S. Geological Survey estimated that over 250 trillion cubic feet, or 7.1 trillion cubic metres of natural gas may lie off Kenya, Tanzania and Mozambique, compared with 186 trillion cubic feet for Nigeria, Africa's biggest energy producer.