Kenya: The next big hitter in African oil exportation?

8 October 2013 • By Dave Baxter

Speculative drilling in the sub-Saharan nation points to major economy boost

Kenya has moved a step closer to becoming an oil exporter after a new discovery in the north of the country.

British company Tullow Oil announced in late September that drilling work had revealed the presence of oil in the Auwerwer and Upper Lokone sandstone reservoirs. The company will now carry out further tests.

For the company, which began drilling in Kenya last year, this is the fourth consecutive discovery of oil there. Earlier this year, the firm decided there was enough oil for commercial exploitation of reserves in the country’s Turkana area.

In a statement, Angus McCoss, Tullow’s exploration director, said: “This success is further evidence of the exceptional oil potential of our East African Rift Basin acreage. We are now increasing the pace of exploration in Kenya, aiming for 12 wells over the next 12 months.”

Keith Hill, CEO at Canadian firm Africa Oil, which is working with Tullow Oil in the region, said: “We are thrilled with the 100 per cent success rate of the drilling to programme to date in northern Kenya, and with 10 additional leads and prospects in this basin, we can expect additional discoveries in the future.

“This discovery gives us further incentive to aggressively push forward plans for development studies of this world-class project, in conjunction with our partners and the government of Kenya.”

If Kenya begins shipping out oil, it would prove a huge boost for its finances. Robust exports of oil would underpin the country’s shilling currency and help it compete with other African nations offering natural resources, such as Uganda and the Democratic Republic of Congo.

Over the years, many oil firms have tried their luck in the country without success. A Deloitte report from earlier this year, The Deloitte Guide To Oil And Gas In East Africa: Where Potential Lies, reads: “Kenya has no proven commercial hydrocarbon discoveries at the time of writing. BP and Shell carried out exploration work in the 1950s, with the first exploration well being drilled in 1960. Over the past 50 years, many other oil and gas companies have tried their luck onshore and offshore, including Exxon, Total, Chevron, Woodside and CNOOC.

“Of 33 wells drilled in the country prior to 2012, 16 showed signs of hydrocarbons, but none were considered commercial.

“Tullow is undertaking an exploration drilling campaign in the hope of replicating its recent Ugandan success.”

With oil exports likely to boost the country’s economy, the Kenyan government will be hoping to hear of more discoveries soon.