Kenya to map out new oil and gas blocks for auction

Kenya plans to gazette and auction off new blocks for oil and gas exploration, an energy ministry official said, after finds earlier this year led to avid interest in previous auctions.

Alfred Odawa, a consultant geologist at the Energy ministry, said British explorer Tullow Oil and Anadarko Petroleum would surrender acreage in a total seven blocks in coming weeks as required in their production-sharing contracts with the government.

“They are surrendering their portion (of the blocks), and we’ll use that to make blocks again,” Mr Odawa said. “From there it will be open and anybody can apply to take it ... We’ll pick the highest bidder.”

Tullow and partner Africa Oil first discovered oil deposits in the country’s Turkana region in March.

At present 45 of Kenya’s existing 46 blocks are licensed, and the last is final stages of negotiation.

Mr Odawa said Tullow Oil would give up a quarter of its territory in block 10BB, where it made its March oil discovery, as well as a quarter of block 13T. Both are onshore.

New blocks

Anadarko will surrender 25 per cent of each of its five offshore blocks.

Currently the companies are determining which quarter of their blocks they want to surrender.

Mr Odawa said they would decide by some point in September. Afterwards, the government will survey the land and determine how to use it to gazette new blocks.

“The companies are going to give up the part of the blocks that are the least valuable to them. Then we will survey and figure out what to do with (the acreage),” Mr Odawa said.

No companies have expressed interest in the surrendered territory, but Mr Odawa said many companies were excited about exploring in Kenya. The relinquishments, which are required in the companies’ production sharing contracts, give ministry officials more land to license to explorers who have been eager to lease Kenya’s lucrative petroleum blocks.

Because the country is in the nascent stages of exploration, and discoveries are fairly uncertain, oil and gas blocks are large.

But as part of signing a production-sharing contract, explorers must surrender a quarter of their blocks after two years if the block is onshore or three years if it is offshore.

Presently, the only unlicensed block in Kenya is L26 in deep water offshore.