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Kenya close to sealing more offshore oil search deals

An offshore oil rig. Kenya is close to sealing a deepwater exploration contract with France's Total. Photo/File
An offshore oil rig. Kenya is close to sealing a deepwater exploration contract with France's Total. Photo/File 

Kenya is close to sealing a deepwater exploration contract with France's Total and has offered three other oil majors new offshore blocks, the Commissioner of Petroleum at the Ministry of Energy said.

Martin Heya, the petroleum commissioner, told Reuters on Tuesday a production sharing contract with Total for block L22 offshore was with the Attorney-General's office, meaning it is close to being signed.

He said the Energy ministry had offered Brazil's Petrobras, Norway's Statoil and Italy's Eni offshore blocks, but the companies had yet to sign agreements.

Oil and gas exploration in East Africa has surged in recent years, after hydrocarbon discoveries in Mozambique, Tanzania and Uganda.

British explorer Tullow Oil has also found oil in Kenya, but its commercial viability is yet to be determined.

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Kenya said in March it was listing eight new deepwater blocks for leasing. It said on Tuesday it had signed production sharing contracts with US-based CAMAC Energy Inc. for four blocks, two of which are new deepwater blocks.

In all, Kenya has 46 exploration blocks. With CAMAC's signing, 34 are licensed.

Heya said last month Total had purchased data in the area that is now block L22. It approached the Ministry of Energy and requested it demarcate a block there. In July 2011, Total signed a heads of agreement with the government to acquire it.

Normally, Kenyan authorities choose where exploration blocks will be, delineate the boundaries and then licence them.

However, because the country had been looking for a company to ramp up exploration efforts offshore - and Total has a long history of exploration in risky, deepwater areas - Kenyan officials responded warmly to Total's proposal, Heya said.

Heya said Texas-based CAMAC was the first explorer to licence any of the eight new deepwater offshore blocks the country gazetted earlier this year.

Two of CAMAC's four blocks, L27 and L28, are in deep waters offshore, due east of the coastal city of Mombasa. Block L1B is onshore while L16 straddles land and sea.

CAMAC has a 90 per cent stake in the blocks and will be the operator, with the government holding the rest. CAMAC says it expects to find a local partner to take a minority interest.

CAMAC signed a preliminary heads of agreement on one other onshore exploration block, 11A in northwest Kenya in February, according to information from the company.

The licences mark CAMAC's entry into East Africa. The Texas company also actively explores in West Africa.

"Signing the PSCs for these four blocks in Kenya represents a milestone in CAMAC Energy's strategy to acquire highly prospective exploration acreage in targeted oil and gas basins in Africa," said Segun Omidele, CAMAC's senior vice president of exploration and production, in a statement late on Tuesday.

Reuters

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