Gas discovery shines focus on Kenya’s off-shore fields

Kenya has become a favourite destination for exploration companies prospecting for natural gas in Africa, financial consulting firm Ernst & Young has said in a new report.

The investors’ interest has risen particularly after recent huge gas finds in Mozambique and Tanzania, shifting the focus of companies involved in small-scale exploration and production to select sub-Saharan countries.

Anadarko Petroleum Corporation announced in June that it had discovered vast amounts of natural gas deposits off the coast of Mozambique.

“Interest in neighbouring offshore Kenya and Madagascar is increasing, based on the belief that similar geological compositions will be found,” notes Ernst & Young in the report titled Natural Gas in Africa — The Frontiers of the Golden Age.

Anadarko, which is one of the many foreign companies prospecting for oil, natural gas, and other minerals in Kenya, later said that it had discovered huge gas deposits off the Kenyan coast.

In a regulatory report filed with the environment authority, Anadarko said it was planning to spend approximately Sh10.2 billion ($120 million) prospecting in Kenya.

Ernst & Young says that the Texas-based oil and gas exploration company opened the new frontier of exploration along Africa’s Indian Ocean coast in 2010 with its massive Windjammer discovery in Area 1 of the Rovuma Basin in offshore northern Mozambique.

Italian based Eni, another international energy company also made discoveries in the Mamba prospect in Mozambique which have boosted recoverable reserve estimates.

The Ernst & Young report notes that other companies such as BG Group and Ophir Energy, Statoil and its partner ExxonMobil have also hit major gas deposits in the Tanzania’s Rovuma Basin.

The global audit, tax, transaction and advisory services firm notes that 10 years ago East Africa was a ‘‘non-story’’ as far as oil and gas were concerned, with complex geology, poor seismic data, and difficult political factors resulting in only a few local coastal explorations with little consequence.

“No longer a non-story, East Africa is now seen as the ‘new promised land’ or the ‘next epicentre’ for global natural gas, the newest ‘new frontier’,” notes the report.

At the beginning of September, Australia-based Pancontinental Oil and Gas and its partners announced that they had struck natural gas deposits on Mbawa 1 block L8, off the Kenyan coast.

Block L8 is run as a joint venture by Apache Corporation which owns 50 per cent, Origin Energy which owns 20 per cent, Tullow Kenya BV 15 per cent, and Pancontinental 15 per cent.

After the discovery, which the companies later said needed further tests, Pancontinental in a statement said that the Mbawa 1 gas discovery proved there was a working hydrocarbon system offshore Kenya and provided significant encouragement for future exploration in other blocks.

Anadarko, which operates five deep-water blocks off the shore of Kenya said that it would begin drilling in this quarter or the first quarter of 2013.