Markets & Finance

Oil and gas reserves found off the coast of Mombasa

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An oil company’s offshore platform. Australia’s Pancontinental Oil and Gas has said it has discovered reserves about 100 kilometres off the Mombasa coastline. Photo/FILE

Kenya’s search for offshore oil and gas has received a shot in the arm with an announcement by Australia’s Pancontinental Oil and Gas that it had discovered reserves about 100 kilometres off the Mombasa coastline.

The find at the Sunbird well is the first of its kind along the western Indian Ocean coast between South Africa and Somalia.

“Pancontinental Oil and Gas is pleased to advise that it has been verified that the recently completed Sunbird-1 well off the southern Kenyan coast has intersected an oil column – the first-ever oil discovered off the East African coast,” said the company in a statement.

Pancontinental said samples from the well obtained at 1,587 metres below the seabed took months to analyse before returning a gross oil column of 14 metres beneath 29.6 metres of gas.

The oil explorer said that there were high prospects for finding commercial quantities of the commodity in the area called the Lamu Basin.

READ: Oil discovered off Kenya’s coast

Pancontinental’s CEO Barry Rushworth said the implications of the Sunbird-1 well results for regional oil exploration were “outstanding”.

“The detailed oil and gas geochemical data, which are confidential to the L10A Joint Venture partners, give the age and type of the oil source rocks, as well as other crucial data that Pancontinental believes places the L10A Joint Venture in a leading position to find commercial oil offshore Kenya,” said Mr Rushworth.

The results are significant because they are the first proof of the presence of a prospective oil system in the Lamu Basin.

Mwendia Nyaga, an oil industry expert with Oil and Energy Services, said the commerciality of the deposits would be determined by further tests.

“We cannot tell about the commerciality of the finding. It will depend on what they tell us going forward. It has taken very long to know about this, but this is the nature of exploration. It takes time to do things,” said Mr Nyaga.

Mr Rushworth said that he expected to see significant increase in industry interest offshore Kenya following the discovery.

Tullow Oil has discovered 600 million barrels of oil reserves at Block 10BB in the Lokichar Basin in Turkana County. This has been raised to potentially one billion barrels, but exploration continues.

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

Other researchers have estimated the size of oil potential in the areas that have already been discovered at Sh880 billion ($10 billion) which is equivalent to a fifth of Kenya’s annual GDP.

London-based consulting firm Global Data said that two exploration blocks 10BB and 13T were enough to generate the Sh880 billion.

Such oil production, Global Data said, would increase the growth of Kenya’s gross domestic product (GDP) by 0.83 per cent annually.

The statement from Pancontinental said that other offshore Kenyan activity includes an exploration well to be drilled by Anadarko later in the year.

Pancontinental said BG Group was continuing to analyse the well data and would recommend a future exploration programme using the well results. Mr Rushworth said late last year that the type of rock in which the discovery was made normally has a high probability of producing oil.

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