Oil exploration in Ngamia 1 in Turkana County last year. Tullow Oil, announced in July that it had discovered some 368 million barrels of the commodity in Turkana’s Lokichar basin. FILE
Australian oil and gas explorer FAR Limited has finalised a joint venture agreement with British company Ophir Energy that will see it own a 30 per cent stake in a Lamu exploration block.
FAR Ltd said in a statement released on Friday it expects to sell a portion of its stake in the exploration block, having already received offers from companies interested in drilling an oil well.
The explorer said in the statement block 9 has the potential to produce more than 300 million barrels of oil. The eastern part of the block is next to the Mbawa-1 where gas was discovered last year.
The price of the stake was not disclosed. FAR is listed on the Australian Securities Exchange.
“FAR Limited (“FAR”) has completed negotiations on joint venture agreements with Ophir Energy Plc on highly prospective offshore Kenya exploration permit Block L9,” FAR Ltd said in a statement released last Friday.
The company said a series of seismic surveys had identified numerous oil and gas prospects.
“FAR has assessed several leads each with the potential to contain prospective resource volumes in excess of 300 million barrels of oil,” the statement said.
The 300 million barrels is above the 250 million threshold used as a yardstick for assessing commercial viability.
Another British explorer, Tullow Oil, announced in July that it had discovered some 368 million barrels of the commodity in Turkana’s Lokichar basin.
In the Friday statement, FAR said it had already received requests from companies wanting to buy into the venture (farm outs).
“FAR has already received a considerable number of unsolicited expressions of interest in Block L9 and will immediately embark on a process to farm out a portion of its 30 per cent participating interest,” the company said.
Recent takeover activity, drilling and major gas discoveries close to FAR’s Kenyan acreage have heightened interest in the East African region.
The statement noted that exploration activity was being ramped up in the Kenya offshore with six high-impact wells expected to be drilled in the next 12 months.
Trading of stakes in the oil exploration businesses has gathered speed in Kenya in the past year following the first discovery of oil in Ngamia-1 near Lake Turkana last year.
Major explorers have exchanged shareholding for millions of dollars as they seek a part of the action in the East African oil exploration.
Africa Oil estimated that the gross prospective resources or the best case scenario of how much oil the Lokichar basin carries is 20.1 billion barrels.
The amount that can actually be pumped out will only be confirmed once the joint operation with Tullow Oil carries out more tests in the next 18 months or so.
The first indications of commercial viability of Kenya’s oil discoveries first emerged from an International Monetary Fund (IMF) report in April, three months before Tullow Oil officially admitted that it had reached a stage where production development could commence.
“Big oil discoveries in the northern Turkana region have now made Kenya a major venue for oil exploration in East Africa. Kenya expects to start producing oil in six to seven years,” said the IMF in the report released on April 30 following 10-day consultations with the Kenya government two months earlier.
A report by Bloomberg News in July showed that limited initial oil production could happen as early as next year.
“We’ve certainly reached the threshold for development,” Tullow chief operating officer Paul McDade was quoted saying by the news agency, adding that “very limited volumes” could be brought to Kenya’s market as soon as 2014 and higher volumes as soon 2016.
