Kenya Oil: Government Leases All Oil Blocks; US Corp Starts Drilling ASAP

July 12th, 2012

  • Energy minister says all the 46 search sites have been contracted to companies for exploration

Kenya has now leased out all existing oil blocks to exploration companies as the country intensifies its oil search after its appetite rose from the Turkana find in March.

Energy minister Kiraitu Murungi says the government has given out the remaining four blocks to international firms including America’s Apache Corp, France’s Total, Anadarko from the US and China’s CNOOC.

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“All our 46 oil blocks including the nine in the deep sea are now contracted out and our offices are currently busy signing production sharing contracts. The role of the ministry now is to follow up to ensure that the work programmes are implemented,” Mr Murungi said this on Wednesday evening at the sidelines of the launch of the Oil and Gas Summit scheduled to start in November.

Apache Corp is expected to drill Kenya’s first deep-water oil well in three months.

“We are going to deep sea drilling again from September with Apache about 60 kilometres East of Malindi. We are witnessing significant interest since we struck oil in Turkana,” he said.

Renewed interest in oil and gas exploration has seen the government rake in over Sh5 billion in license fees as multinationals scramble for rights to search for the black gold.

On average, a company licensed to explore in any of the blocks pays Sh25 million ($300,000) as a one-off goodwill charge for the licence, Sh14.7 million ($175,000) training fee per year and a negotiable surface fee that averages to about Sh840 ($10) per kilometre for each year the company is licensed.

Kenya has 46 gazetted blocks located in four sedimentary basins covering an area of 485,000 square kilometres.

The Energy ministry said the government is keen to learn from the best practices around the world to guide the exploitation of oil in an effort to protect the country from the risks associated with oil.

“We are looking at countries like Abu Dhabi, Norway and Ghana which have managed their oil resources fairly well as examples. However, we want to make Kenya a case study of the best management of oil in the world,” he said.

The ministry will be co-hosting the conference — East Africa Oil and Gas Summit — in partnership with Global Event Partners (K) Ltd between November 12 and 14.

The two-day conference is expected to provide a platform for leading East African decision makers to engage with international and local investors on investments opportunities.

In Featured image– Energy minister Kiraitu Murungi displays a bottle with crude oil on March 26. He has said he wants to make Kenya a case study of the best management of oil in the world.