This time we’ll strike it rich, says oil prospector

Financial Standard

By John Oyuke

After a threat from prevailing global economic recession, oil exploration efforts are looking up once again.

Africa Oil Corporation— a Canadian oil firm— has re-jigged the efforts through a new partnership to explore black gold in the arid northern Kenya region.

Africa Oil Corporation signed the agreement with the Dubai-based oil exploration firm, Black Marlin Energy Ltd (BMEL) to seek for oil and gas resources in Anza basin, thought to hold part of the oil wealth extending to South Sudan.

An engineer at an oil exploration site. The renewed oil search is a major boost to Kenya’s oil exploration initiative. [PHOTO: FILE]

They would prospect oil in Block 10A in the Anza Basin of northern Kenya.

The agreement also extends to exploration of potential oil fields in Ethiopia and lead towards drilling if commercial quantities of oil are found in northern Kenya and in Ethiopia’s Ogaden Basin in southern Ethiopia. In Kenya, Africa Oil will transfer a 20 per cent license interest to Black Marlin Energy subsidiary, East African Exploration Ltd (EAXL) in the Production Sharing Contract.

Black Marlin Energy Chief Executive Jeff Hume announced last week, the firm plans to invest Sh770 million over the next three years in the exercise. He said Africa Oil brings strong technical experience to the Joint Venture while Black Marlin’s business model offers high quality seismic services.

gas potential

"I am very pleased to be able to announce this strategic and exciting transaction and look forward to working very closely with Africa Oil Corp," he said last week.

Hume believes there is good oil and gas potential in the Anza Graben in Kenya. "We believe that oil and gas will be discovered somewhere in Kenya in the next two to three years," he said.

Hume said in the prospective Block 10A Production Sharing Contract, Africa Oil has executed a seismic contract with BMEL’s Upstream Petroleum Services Ltd, a geosciences services unit.

EAX is an operator in Block 1 in Kenya with a 50 per cent interest and is 40 per cent partner in Block L17/L18 near Mombasa.

Kenya represents EAX and Black Marlin’s largest exploration commitment worldwide. Africa Oil holds a 100 per cent interest in Block 10A and has farmed into Block 9 with a 30 per cent interest. Africa Oil Corp farm-in transaction with BMEL is however subject to government approval. The oil exploration agreement is a boost to the country’s oil exploration initiative as it comes against a continued global economic downturn that has restricted the operations of many oil-prospecting companies.

facilitate growth

Opening the fourth East African Petroleum Conference in Mombasa recently, Energy Minister Kiraitu Murungi said the economic crisis was a serious threat to the country's pursuit for oil deposits as most companies involved in the search were caught up in the situation.

In his Budget speech Finance Minister Uhuru Kenyatta said the Government has introduced new measures to reduce the cost and encourage private sector players to conduct oil exploration activities.

He said plans are in place to grant import duty exemption on equipment and inputs excluding motor vehicles imported by a licensed company for direct and exclusive use in oil, gas or geothermal exploration and development.

Uhuru said these would help fast-track ongoing exploration initiatives and complement Government’s efforts towards addressing the aspirations of the people and facilitate growth of the economy.

The measures in the 2009 Budget anchored on the Theme: "Overcoming Today’s Challenges for a Better Kenya Tomorrow" comes when local oil exploration efforts appears to be looking up again after encountering serious threat from the global economic recession.

Kiraitu said most companies engaged in oil exploration in the country had either put on hold or scaled down operations due to the capital intensity of the exploration process.

"I wish to confirm that Kenya 's exploration efforts have been seriously affected by the economic crisis," he said.

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