Consultancy values Kenya’s proven oil reserve at Sh870bn

Kenya’s oil blocks with proven reserves so far could generate as much as $10 billion (Sh870 billion) and catalyse the growth of the economy, a consultancy has said.

GlobalData, a London-based research and consulting firm, said the figure is based on estimates from findings on the successful wells that have been drilled by Tullow Oil and African Oil.

Britain’s Tullow Oil and African Oil of Canada have successfully struck a series of wells on blocks which they operate in Turkana, northern Kenya.

“According to GlobalData, block 10BB/13T alone could generate approximately $10 billion in revenue over a 30-year production period, based on regional geological characteristics and well test results,” said the consultant in a statement released on Wednesday.

GlobalData added revenues from the blocks would translate to GDP growing by an extra 0.83 percentage points annually.

The two companies equally share interests in Block 10BB and 13T which have yielded positive gains. At the beginning of the year Tullow said that the basin, where the blocks are located, could have as much as one billion barrels of oil.

READ: Tullow puts Turkana oil at a billion barrels after new find

The amount of oil, quality and how much of it can be extracted from will be known as more wells are dug, but the exploration companies have said that signs are promising.

“Our focus remains on continuing to explore and appraise our first successful basin, as well as stepping out into several untested basins, which together form a chain of prospective basins that have the potential to become a transformational new oil province,” Tullow exploration director Angus McCoss said when the firm gave its latest update on Kenya operations.

The government and the explorers are discussing the possibility of constructing a pipeline and other supporting infrastructure and hope production will begin by 2016.

However, there has been delay in issuing of new licences due to proposed changes in relevant law.

The delay is a result of a review of exploration and production laws which became necessary after the findings in Tullow’s blocks and natural gas in offshore blocks, which the present law had not catered for.

The Bill will first have to be debated by Parliament and then gazetted, which should happen in the second half of the year.

The first Draft Bill has now been prepared and the final draft, expected by end of May, will be submitted to the Cabinet for appraisal and input before being sent to the State Law Office for polishing.

The draft will then be forwarded to Parliament for debate and if adopted, presented to President Uhuru Kenyatta for signing into an Act,” said a statement from the Ministry of Energy.

GlobalData said that the delay might be a boost for the industry.

“The delay in Kenya’s first licensing round could prove beneficial to the country’s economy, as international oil companies could make additional, commercial oil and gas discoveries before the end of the year.

‘‘This would in turn strengthen prospectivity and interest in the country’s oil and gas industry,” said John Sisa, GlobalData’s lead analyst (Upstream Oil & Gas in the Sub-Saharan).

Additional discoveries would also increase government revenue from issuing licences and it would also be in a better bargaining position with the oil companies.