16 January 2014

Uganda: Kenya Moves Closer to Getting Commercial Oil

Photo: Tullow Oil/Facebook
Tullow's first onshore exploration well in Kenya, Ngamia-1.

Kenya has moved closer to striking commercially-viable oil after Tullow Oil made new discoveries in the northern part of the country.

The company announced on Wednesday that it had made discoveries at Amosing-1 and Ewoi-1 in Block 10BB in northern Kenya. For that, Tullow believes there is more oil in Kenya than it had earlier estimated.

"As a result of the latest successes and recently-reported discoveries at Ekales-1 and Agete-1, Tullow has updated its estimate of discovered resources in this basin to over 600 mmbo," the company announced in a statement. It added: "Tullow believes that the overall potential for the basin, which will be fully assessed over the next two years through a significant programme of exploration and appraisal wells, is in excess of one billion barrels of oil."

Kenya's prospects have gone further to improve East Africa's image as the next destination for oil explorers. Uganda has started the process of producing its oil, with one production licence already issued, as the country targets to produce its first barrel of oil by 2018. Up to 3.5 billion barrels of oil have been discovered in less than half the area suspected to hold oil deposits so far, with about 1.2 billion of that said to be recoverable.

Uganda expects to hold the next round of licensing in 2015, with a couple of oil majors like ExxonMobil said to be waiting on the sidelines. Uganda's neighbour to the north, South Sudan, is already exporting oil.

Tanzania continues to strike significant gas finds as the country seeks ways of developing the mineral. Major oil firms like ExxonMobil and Statoil are already operating in Tanzania. The Kenyan discovery has also improved Tullow's image as a top exploration company. The company says it has maintained a 100% rate of discovery in Kenya.

"The Amosing-1 and Ewoi-1 discoveries in Block 10BB continue Tullow's 100% success record in the basin with seven out of seven discoveries to date," according to the company statement. In Uganda, Tullow has a success rate of close to 90%, far higher than the international average of between 10% - 20%.

Tullow operates both the Amosing-1 and Ewoi-1 wells with a 50% interest and Africa Oil has a 50% non-operated interest. The companies are said to be discussing with the government of Kenya over the prospects of oil production.

"Given the significant volumes discovered and the extensive exploration and appraisal programme planned to fully assess the upside potential of the basin, Tullow and partners have agreed with the government of Kenya to commence development studies," the statement noted.

It quoted Paul McDade, the chief operating officer at Tullow, as saying:

"The results to date are extremely positive for achieving a commercial development from the discoveries made in this basin. We will now be working with the National and County governments with the aim of progressing both the upstream development and the associated export pipeline to project sanction in the period 2015/2016."

Tullow says Kenya's oil has almost similar features to that being explored in Uganda.

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