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KenGen starts drilling works on Ethiopia’s Sh7.6b second phase contract

NEWS
By Fredrick Obura | June 2nd 2021
Olkaria Geothermal Power Plant in Naivasha. [Jonah Onyango, Standard]

Kenya Electricity Generating Company (KenGen) has started drilling the first geothermal well for Ethiopia Electric Power (EEP) Company, setting in motion Phase II of the Sh7.6 billion contract.

The company has so far drilled 29 metres against a possible maximum of 3,000 metres, further entrenching KenGen’s foothold in the Horn of Africa.

KenGen Chief Executive Officer Rebecca Miano said the exercise started on May 29, 2021, whereby the first hole section was drilled to 29 metres within eight hours. "So far, drilling operations are running smoothly as the team moves to the next hole section. Drilling a single well takes about two months to complete. We however hope to shorten this period despite the prevailing circumstances brought about by Coronavirus Disease (COVID-19)," Ms Miano said.

Miano said KenGen would within the next three weeks mobilise specialised drilling services crew including aerated drillers, directional drillers, and reservoir engineers to ensure the project was a success.

She said KenGen was keen on offering expert services in electricity generation, geothermal development consulting, power plant operation and maintenance and other related services across Africa.

Speaking during the official signing ceremony, former EEP CEO, Dr Abraham Belay said they were optimistic KenGen would be able to drill the projected number of wells.

“What is more exciting is the fact that KenGen is also building the capacity of our people and eventually, we will also be able to manage geothermal equipment and run the power plants after the company exits the sites,” Dr Belay added.

He revealed that Ethiopia’s quest for geothermal energy spans over four decades as the country had tried to venture into geothermal development as far back as 1981. With KenGen’s entry into the country, Ethiopia is now staring at a geothermal generation breakthrough.

This move by KenGen to commence Phase II of the project follows the completion of Phase I of the contract by the consortium partners under which two rigs were delivered at Aluto site in Ethiopia. The First Phase entailed the purchase of drilling rigs while Phase II entails the provision of drilling services. KenGen is supplying about 30 per cent of the component of Phase II which translates to about US$6.2 million (about Sh620 million).

Under this project, which is financed by the World Bank through a loan to the Ethiopian government, a total of eight wells will be drilled in Lot 1 using two rigs with expected revenue of Sh620 million (US$6.2 million). Each rig is expected to drill four wells within one year. Depending on the outcome of Lot 1 wells, an additional 12 wells may be drilled under Lot 2 bringing the total to 20 wells.

In February 2019, KenGen won a joint contract with Shandong Kerui Petroleum Equipment Company and Shandong Kerui Oilfield Service Group to supply geothermal drilling services. The project is being managed between the three consortium members.

At the same time, also in the Horn of Africa, KenGen has completed drilling the first two wells for Tulu Moye Geothermal Operations PLC (TMGO) in Ethiopia and is currently preparing to drill the third well.

In October 2019, KenGen signed a contract with Tulu Moye to drill 12 geothermal wells and also supply, install, operationalise, and maintain water supply system for the project. These two projects are hinged on the company’s diversification strategy which has led to the organisation’s expansion in the horn of Africa.

Besides Ethiopia, KenGen has also secured Sh709 million contract to offer commercial drilling services in Djibouti.

In February this year, the company signed the contract with Office Djiboutien De Development De lenergie Geothermique (Djiboutian Office of Geothermal Energy Development) (ODDEG). KenGen is also prospecting for similar business in Rwanda.

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