Tullow rejects bid for joint oil search with Chinese firm
Posted Friday, February 18 2011 at 00:00
UK oil giant Tullow Oil has refused to partner with a Chinese firm in the renewed search for oil in Kenya, further strengthening the hand of Western companies in the exploration business at the expense of Asian firms.
The London-listed oil firm reckons that it cannot accommodate China National Offshore Oil Corporation (CNOOC) at the exploration stage and that it can consider a deal once it strikes oil, according to senior officials at the Ministry of Energy.
The Chinese firm, which was the largest investor in the country’s exploration work three years ago before exiting Kenya last December, had applied for a 20 per cent stake in three oil blocks awarded to Tullow in the high potential Lake Turkana region.
The rebuff is set to hurt the Chinese firm’s interest in the region as it had hoped to benefit from Tullow’s superior exploration skills.
“The requests for investment in new areas have been rejected and their bid to partner with Tullow did not go through,” said the senior official the Energy ministry who requested anonymity given the sensitivity of the matter.
The move is set to be a blow to the Chinese government, which has in the past six years increased investment in oil exploration work in Kenya and other African countries.
State-owned CNOOC had been a major factor in oil exploration in Kenya after securing exclusive exploration rights in 2004 from the Kibaki’s administration, which had adopted a policy to look East for investments and aid as traditional partners like Western Europe and US become more tight-fisted.
European companies seeking oil exploration licences were then asked by the Energy ministry to go into joint ventures with CNOOC in a process technically known as farm-ins.
The move generated complaints from a number of Western firms over alleged favouritism of Chinese firms in the award of government contracts.
But after failing to discover commercially viable deposits, the Chinese oil firm has in the past three years been reducing its interest culminating in an exit last December—leaving the bulk of the exploration work in the hands of European and US firms.
The main beneficiary
Kenya has 34 oil blocks, with 22 already awarded. Western nations collectively now control 16 of the blocks with US firm Anadarko, which has five blocks, being the main beneficiary.
Anadarko, which struck gas in Madagascar, is active at the coast while Tullow, which is credited with Uganda’s successful oil search, is busy in the Turkana region.
Kenya is emerging as the odd country in the region in the hunt for oil as Uganda has discovered crude while Tanzania has gas.