Two firms that have been searching for oil in Lamu have quit, further casting doubts on Kenya’s dream of riches from the fossil fuel.
Pancontinental Oil and Gas, and Far Ltd said they have issued the government with a surrender and termination notice, with expectations that the exit will be concluded by end of September.
The two Australian firms are among those that excited Kenyans a few years ago after announcing what they then termed a major discovery of natural gas in offshore Lamu. They had in September 2012 said a well (Mbawa I) sunk 60 kilometres into the ocean had found huge natural gas resources that could be commercially viable with further exploration.
A few months earlier in April, the government had announced that Tullow Oil had made an oil discovery in Turkana, giving Kenyans high hopes that the country would soon emerge as a significant oil and gas producer.
In its report for the quarter to June 2020, Far Ltd, however, said it had issued the Petroleum ministry with the quit notice for the Block L6 where it had a 60 per cent stake, with Pancontinental holding the other 40 per cent.
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The firm said there had been little progress owing to lack of access to land.
While most of the block is offshore, some bits are on land and the companies have had difficulties working on it owing to access dispute with Kipini Wildlife Conservancy, which barred the exploration firm from using its land to access the onshore sections of Block L6.
“Following a long period of inactivity due to land access issues, Flow Energy Pty Ltd, a Far Limited subsidiary, and its co-venturers, Pancontinental Oil and Gas and Afrex Ltd, a subsidiary of Pancontinental, agreed to surrender the Block L6 PSC,” said Far in its quarterly statement.
“A Surrender and Termination Notice was formally issued to the Government of Kenya in late June. Far anticipates concluding the termination arrangements in the next quarter.”
While there has not been much activity on Block L6 after the initial surveys in 2012, exit of the two firms dampens the prospects of Kenya as an emerging oil and gas producer.
It also comes in the wake of challenges that partners in the Lokichar Turkana project are experiencing. These include delays in making crucial decisions that should enable the project move to commercial phase.