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Global firms eye growing oil and gas resources
Posted by: The People in Business November 7, 2013 0 38 Views
Four major international oil companies have shown interest in Kenya’s remaining oil exploration licences following the Turkana basin discovery, according to an economic update report. In its latest assessment of Kenya’s oil and gas potential, global analyst on economic matters, Oxford Business Group (OBG) says France’s Total, China National Offshore Oil Corporation, ExxonMobil and Chevron are also eyeing the huge exploration opportunities in the country.
“The Turkana discovery has led to major international interest in Kenya’s remaining oil exploration licences, including from France’s Total, China National Offshore Oil Corporation, ExxonMobil and Chevron, though no other companies have yet announced commercially viable discoveries,” says OBG in a statement. Kenya has 46 blocks, of which 44 are licensed to 23 exploration companies.
While the government plans to create and offer seven new blocks in the near future, OBG says the new interest has signaled that Kenya’s run of geologic luck continues. UK’s Tullow Oil and Canada’s Africa Oil have recently announced the fourth consecutive discovery of oil in Turkana, further indicating that interest will grow among international oil explorers.
Similarly, while activity in the natural gas sector is proceeding at a slower pace, following the recent departure of one explorer, the outlook for new finds is promising, OBG says in its report titled ‘Recent discoveries in Kenya highlight oil and gas potential. Tullow and Africa Oil, joint partners in the exploration of the East Africa Rift Basin, announced in late September that drilling revealed oil in the Auwerwer and Upper Lokone sandstone reservoirs, bringing their total discoveries in Kenya to an estimated 300 million barrels.
The companies had previously announced a major discovery in Turkana after beginning exploration in late 2012. The partners have exploration licences for 12 blocks and have identified 10 additional leads and prospects. They plan to drill 12 wells over the next year, the report further says. Meanwhile, there is continued activity around the existing licences.
The UK’s Premier Oil recently bought into an exploration project through a deal with Taipan Resources for Block 2B, which contains the Pearl prospect, with its potential for 100 million barrels. In the economic update, OBG says upstream investment in oil production already stands at an estimated Sh85 billion ($1billion) a year excluding exploration.
“It is expected to grow by 60 per cent per year through 2018,” notes OBG in the report. The sudden surge in interest has led Kenya to reconsider its regulatory regime for the award of licences. In July, the government announced it would adopt open tendering for exploration licences to replace the “first-come-first-served” process after recommendations by a World Bank consultant. The recommendation is anchored on the need for transparency in the tendering process and to attract competent contractors to the oil and gas sector.
“We recommend that Kenya adopts a public tendering regime for contract awards as more interest in the country’s exploration blocks yields competitive environment,” Hunton & Williams and Challenge Energy Consultants said in a final draft seeking to come up with a regulatory framework. The draft was made public at an energy forum in July attended by Energy and Petroleum Cabinet Secretary Davis Chirchir and World Bank officials.
Under the current regime, the Cabinet Secretary in charge of petroleum simply puts out a notice of available open blocks, paving way for interested contractors to submit applications for negotiations. However, the approach, based on first-come-first-served principle, has been criticised for handing mining rights to highly-connected speculators who make billions of shillings by selling them to real investors.
Following the Turkana discovery, the government also switched to a production sharing contract model for oil discoveries to replace its prior practice of collecting three per cent royalties on natural resources. OBG further says following the new government approach, oil production will also be subject to a 42 per cent corporate tax on net profits in addition to the PSC arrangement.
However, despite the significant discoveries, major production is still some distance away, the group observes. The IMF forecasts Kenya will begin producing oil in six to seven years. Tullow is more optimistic, predicting that Kenya could start exporting oil by 2016. - By GEORGE KEBASO
http://www.thepeople.co.ke/30629/global-firms-eye-growing-oil-and-gas-resources/
Posted by: The People in Business November 7, 2013 0 38 Views
Four major international oil companies have shown interest in Kenya’s remaining oil exploration licences following the Turkana basin discovery, according to an economic update report. In its latest assessment of Kenya’s oil and gas potential, global analyst on economic matters, Oxford Business Group (OBG) says France’s Total, China National Offshore Oil Corporation, ExxonMobil and Chevron are also eyeing the huge exploration opportunities in the country.
“The Turkana discovery has led to major international interest in Kenya’s remaining oil exploration licences, including from France’s Total, China National Offshore Oil Corporation, ExxonMobil and Chevron, though no other companies have yet announced commercially viable discoveries,” says OBG in a statement. Kenya has 46 blocks, of which 44 are licensed to 23 exploration companies.
While the government plans to create and offer seven new blocks in the near future, OBG says the new interest has signaled that Kenya’s run of geologic luck continues. UK’s Tullow Oil and Canada’s Africa Oil have recently announced the fourth consecutive discovery of oil in Turkana, further indicating that interest will grow among international oil explorers.
Similarly, while activity in the natural gas sector is proceeding at a slower pace, following the recent departure of one explorer, the outlook for new finds is promising, OBG says in its report titled ‘Recent discoveries in Kenya highlight oil and gas potential. Tullow and Africa Oil, joint partners in the exploration of the East Africa Rift Basin, announced in late September that drilling revealed oil in the Auwerwer and Upper Lokone sandstone reservoirs, bringing their total discoveries in Kenya to an estimated 300 million barrels.
The companies had previously announced a major discovery in Turkana after beginning exploration in late 2012. The partners have exploration licences for 12 blocks and have identified 10 additional leads and prospects. They plan to drill 12 wells over the next year, the report further says. Meanwhile, there is continued activity around the existing licences.
The UK’s Premier Oil recently bought into an exploration project through a deal with Taipan Resources for Block 2B, which contains the Pearl prospect, with its potential for 100 million barrels. In the economic update, OBG says upstream investment in oil production already stands at an estimated Sh85 billion ($1billion) a year excluding exploration.
“It is expected to grow by 60 per cent per year through 2018,” notes OBG in the report. The sudden surge in interest has led Kenya to reconsider its regulatory regime for the award of licences. In July, the government announced it would adopt open tendering for exploration licences to replace the “first-come-first-served” process after recommendations by a World Bank consultant. The recommendation is anchored on the need for transparency in the tendering process and to attract competent contractors to the oil and gas sector.
“We recommend that Kenya adopts a public tendering regime for contract awards as more interest in the country’s exploration blocks yields competitive environment,” Hunton & Williams and Challenge Energy Consultants said in a final draft seeking to come up with a regulatory framework. The draft was made public at an energy forum in July attended by Energy and Petroleum Cabinet Secretary Davis Chirchir and World Bank officials.
Under the current regime, the Cabinet Secretary in charge of petroleum simply puts out a notice of available open blocks, paving way for interested contractors to submit applications for negotiations. However, the approach, based on first-come-first-served principle, has been criticised for handing mining rights to highly-connected speculators who make billions of shillings by selling them to real investors.
Following the Turkana discovery, the government also switched to a production sharing contract model for oil discoveries to replace its prior practice of collecting three per cent royalties on natural resources. OBG further says following the new government approach, oil production will also be subject to a 42 per cent corporate tax on net profits in addition to the PSC arrangement.
However, despite the significant discoveries, major production is still some distance away, the group observes. The IMF forecasts Kenya will begin producing oil in six to seven years. Tullow is more optimistic, predicting that Kenya could start exporting oil by 2016. - By GEORGE KEBASO
http://www.thepeople.co.ke/30629/global-firms-eye-growing-oil-and-gas-resources/
