The development of a land bridge to transport oil across East Africa could transform the region

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Kenya has long carried out exploratory drilling – a total of 31 exploration wells were drilled between 1960 and February 2012 – but until recently it did not record any significant finds. This changed in March 2012, when Tullow Oil announced an oil discovery at the Ngamia-1 well in Turkana. As of July 2014, a further 16 wells had been drilled, of which 11 were discovery wells.


Majors including BP and Shell were among those firms which began exploring in Kenya before independence in 1963. In the time since, 10 wells in the Lamu Basin failed to yield commercial finds, although interest in offshore potential in that area continued through the 1970s and 1980s. Following the revamping of legislation relating to petroleum export and production in 1986, further onshore exploration took place, before attention turned back to the Lamu Basin in the 1990s. A number of production-sharing contracts were signed through the 2000s, but interest in Kenya’s hydrocarbons producing potential was only revived – following decades of disappointing results both onshore and offshore, in which explorers found signs of hydrocarbons but not in commercial quantities – after several significant post-2010 finds in Uganda and offshore Mozambique and Tanzania.

Kenya has four key sedimentary basins in Lamu, Anza, Mandera and the Tertiary Rift that span the country, covering some 485,000 sq km by the Ministry of Energy’s estimates. These are believed to be extensions of basins in neighbouring countries where large hydrocarbons deposits have already been found. Both the onshore and offshore areas of the Lamu Basin present similarities to Tanzanian and Mozambican coastal deposits, while the Tertiary Rift Basin could be a continuation of Uganda’s Lake Albertine Rift Basin, which is believed to hold up to 3.5bn barrels of oil. The Anza Basin seems to be a continuation of the Central Africa Rift system, which in South Sudan is said to hold around 6.7bn barrels, and the Mandera Basin extends into basins in both Somalia and Ethiopia. Some in the industry put Kenya’s possible deposits in the region of 10bn barrels of oil, which if proven would elevate the country to among Africa’s most resource-rich nations.


Tullow Oil – an important explorer at the forefront of other East African discoveries – farmed into six blocks in the Turkana Rift Basin, including one in Ethiopia. The company’s Kenyan exploration activities centre on the South Lokichar Basin, which is largely situated in Turkana County in the north-west of the country, and the firm acquired a 50% interest in licences 10BA, 10BB, 10A, 12A and 13T. In March 2012 Tullow Oil – working in partnership with Canada’s Africa Oil and Texas-headquartered Marathon Oil – announced an oil discovery at its wildcat Ngamia-1 well on Block 10BB, followed by others at Twiga South-11, Etuko-1, Ekales-1 and Agete-1. In mid-2013 Tullow confirmed that Kenya’s reserves meet the threshold for commercial exploitation and increased its estimate for combined yields from Ngamia-1 and Twiga South-1 to 5000 barrels per day (bpd). By September 2013, the consortium revised its estimates for the South Lokichar Basin upwards to 368m barrels of oil, and further discoveries were made at the Amosing-1 and Ewoi-1 exploration wells. Tullow estimates its resources at some 600m barrels, with overall potential in the South Lokichar Basin of over 1bn barrels. At the end of August 2014 Tullow Oil announced another discovery of oil at the Etom 1 exploration well that it said extended the already proven South Lokichar Basin significantly northwards.

Since the first discovery of oil in March 2012, a total of 16 wells have been drilled in Kenya, of which 11 are discovery wells. Tullow has been responsible for eight onshore oil discoveries, while other firms have announced onshore and offshore oil and natural gas finds. Overall, Kenya has licensed 43 of 46 gazetted blocks to at least 23 different exploration companies, with one licensed to the state-owned National Oil Corporation of Kenya (NOCK). The country’s first competitive licensing round, expected in late 2014, should offer another seven blocks. There remains the possibility of some allocations happening before the full policy and legislative review is complete. Several existing licensees are likely to increase their investment once the new regulations are in force. Kenya is expected to begin oil production before 2020, with some in the sector suggesting that timelines could be significantly shorter. Other leading energy firms lined up to launch their own exploration activities onshore and offshore include Ophir Energy, Anadarko, ENI and Afren, while Tullow plans to drill more than 20 wells by end-2015. “We expect Turkana reserves to grow, but if there are significant discoveries in the Anza Basin, it really would put Kenya in the big league,” Oscar Kang’oro, head of oil and gas for East Africa at Standard Bank of South Africa/Stanbic Bank, told OBG. There has already been a gas discovery onshore in the Anza Basin by Africa Oil and Marathon Oil. The Sala-1 well find, on Block 9, is the first major basin-opening discovery, with more appraisal and exploration wells expected in the area. Africa Oil, which operates the block, announced the find in June 2014, with three zones of interest as well as oil shows. Spudding of Sala-2 is expected later in 2014.


The country’s first offshore natural gas discovery came in September 2012, when Australia-based Pancontinental Oil and Gas, Tullow and US-based explorer Apache, which was the operator of the L8 block but has since ceded its stake, announced a find of 50 metres of net gas pay offshore Malindi. The consortium found some 52 metres of net gas pay in the primary target, but plugged and abandoned the Mbawa-1 well after nothing was found in the deeper secondary target. Recent developments have further stimulated interest in Kenya’s offshore prospects. In June 2014 Pancontinental announced a “highly significant” discovery of oil in an exploratory well in the Lamu Basin. Pancontinental, which has a 18.75% stake in the block – alongside operator BG Group (50%) and Thai state-owned exploration and production firm PTTEP (31.25%) – said that the Sunbird-1 discovery was the first-ever oil column to be found off the East African coast. The results are said to be the first proof of a prospective oil system in the offshore basin. In August, however, PTTEP warned that oil and gas samples at the Sunbird-1 missed the commercial threshold, which may see the well written off. But the results are set to inform further drilling in the same area. “There are high public expectations of the sector,” said Kang’oro. “But it really does have the potential to change the face of the country.”

Kenya also offers a possible transit route for its landlocked neighbours, notably Uganda and South Sudan. Uganda’s crude oil exports are projected to reach 140,000 bpd, with total production of about 200,000 bpd. The bulk of production is expected to begin in 2017. While Uganda plans to build a refinery with eventual capacity of 60,000 bpd – in which other East African countries are expected to invest – some of the crude production will be exported directly. The Lamu Port and South Sudan-Ethiopia Transport Corridor project will be critical to the ability of the region to export oil.



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