UK Oil Explorer To Spend Sh13.7Bn On Mombasa Block

London listed explorer BG Group plans to spend Sh13.7 billion ($160 million) in drilling for oil and gas at its two offshore blocks located East of Mombasa island; heightening Kenya’s search for black gold.

A Tullow exploration site in Turkana. BG Group plans to spend Sh13.7 billion in drilling for oil and gas at its two offshore blocks located East of Mombasa island Photo/File

A Tullow exploration site in Turkana. BG Group plans to spend Sh13.7 billion in drilling for oil and gas at its two offshore blocks located East of Mombasa island Photo/File NATION MEDIA GROUP

The British oil and gas explorer will from next year begin drilling three wells on exploration blocks L10A and L10B; joining a host of foreign firms searching for energy resources in Kenya, spurred by Tullow’s oil find.

The Reading-based energy firm has written to the National Environment Management Authority (Nema) seeking approval to commence deep-sea drilling works at the two blocks it acquired in 2011.

“BG is planning to undertake exploration drilling to identify potential commercial reserves of oil and gas within the L10A and L10B licence blocks,” says BG Group in its environmental impact assessment (EIA) report to Nema.

“The purpose of the drilling programme is to drill up to three exploration wells from a drillship to investigate the geological structures identified from BG’s seismic surveys as potentially containing natural gas and oil reserves.”

Kenya has witnessed increased activity in the upstream sector evidenced by aggressive drilling of exploratory wells for oil and gas ever since Tullow Oil first struck crude deposits in Turkana in March 2012.

Tullow last month made it fourth consecutive wildcat discovery since the British firm began exploratory drilling in the semi-arid region in 2012; and is now testing the commercial viability of its finds.

Africa Oil, Tullow’s joint operating partner in parts of northern Kenya and Ethiopia, announced it had raised fivefold the estimated deposits in the Lokichar basin to 368 million barrels of oil.

Uganda has already struck commercial crude oil deposits while Tanzania and Rwanda have made discoveries of vast natural gas reserves; developments that underline East Africa’s potential as an energy resource-rich region.

BG says drilling will help quantify the potential of the two blocks estimated to hold 1 billion barrel of oil equivalent (boe) of natural gas.

BG Group entered Kenya in 2011 and has signed production sharing contracts with the government for the two offshore exploration blocks.

BG Group is the operator of both blocks where it holds a 40 per cent stake in in Block L10A together with its partners Cove Energy 25 per cent, Premier Oil 20 per cent and Pancontinental 15 per cent.

It has a 45 per cent interest in Block L10B which is also owned by Premier Oil 25 per cent, Cove Energy 15 per cent and Pancontinental 15 per cent.

The exploration firm is banking on the Kenyan blocks to bolster its regional operations having already discovered huge natural gas reserves in Tanzania and Mozambique.

Kenya has so far licensed 44 out of its 46 oil blocks and to date none of the explorers has made commercial discoveries of oil or gas.

A recent report by US-based research firm Casey forecasts that East Africa will be one of the world’s most important energy producers by 2040.

The study titled The Global Race for African Oil says that East Africa will emerge as a global player in the oil and gas industry, raking in trillions of dollars as energy-thirsty economies like China move to buy the resources.

– Business Daily