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Kenya’s investment in oil and gas exploration is growing

Searching for oil
off the East African
Nairobi, Kenya — ESI-AFRICA.COM — 12 August 2011 – Kenya’s planned investment in oil and gas exploration may rise to a record as the discovery of crude in neighboring Uganda piques interest in the largely untapped country.

Tullow Oil plc “’  the London-based explorer with the most licences in Africa “’ plans to sink two test wells in north- western Kenya this year and early 2012, while U.S.-based Apache Corporation may drill offshore next year, Kenyan petroleum commissioner Martin Heya said in an interview here. “Spending on exploration and drilling is estimated at US$126 million, and other companies may follow as more plans are approved,” he said.

“The level of activity is at a high and we think once Tullow starts drilling we must prepare ourselves for even more interest,” Heya added. “The more wells that are drilled, the faster a discovery will be made.”

Exploration companies are increasing spending in Kenya as neighboring Uganda,
with an estimated 2.5 billion barrels of oil reserves, prepares to become a crude producer next year when Tullow expects to start pumping from the Lake Albert Basin.

Only 32 exploratory wells have been drilled in Kenya. That compares with 480 in East Africa, 14,500 in the west of the continent and 19,000 in north and central Africa, according to data from U.K.- based explorer Afren plc.  

“Big companies like Tullow coming into the country automatically create more interest,” Dragan Trajkov, an oil and gas analyst at Renaissance Capital in London, said in an e- mailed response to questions today. “I wouldn’t be surprised if the Kenyan government tries to capitalise on it, as it provides credibility to potentially finding more discoveries.”

“Kenya has no proven reserves, but about 14 oil and gas companies including Anadarko Petroleum Corporation , based in Texas, Canada’s Vanoil Energy Limited  and Afren have signed 26 production-sharing agreements with Kenya,” Heya said.

“In Kenya, once new legislation required under a constitution enacted last year is put into force, there may be tighter restrictions on entrants to the oil and gas industry, as lawmakers will have to approve exploration plans,”  Heya explained.
“Now is the right time for people to come,” he added.