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Economy

Pancontinental may increase stake in Kenya's offshore L8 Block

An offshore oil and gas exploration rig. Pancontinental Oil and Gas has announced that it could increase its ownership in Kenya's offshore L8 Block, if Apache Corp cedes its 50 per cent stake. Photo/FILE
An offshore oil and gas exploration rig. Pancontinental Oil and Gas has announced that it could increase its ownership in Kenya's offshore L8 Block, if Apache Corp cedes its 50 per cent stake. Photo/FILE 

Pancontinental Oil and Gas has announced that it could increase its ownership in Kenya's offshore L8 Block if American explorer Apache Corp cedes its 50 per cent stake.

The oil explorer on Thursday said that Apache Corp has not yet notified it of its intention to cede its stake in the block.

Apache Corp on Tuesday told Reuters that it was abandoning its hunt for hydrocarbons in Kenya, its only venture in Sub-Saharan Africa.

“Apache has not yet given written notification of its withdrawal to the L8 Joint Venture nor has it given written notice of its resignation as Operator under the Joint Operating Agreement (JOA),” said Barry Rushworth, chief executive officer, Pancontinental in a statement.

Kenya's offshore L8 Block is also 20 per cent owned by Origin Energy Limited while Pancontinental and Tullow each have a 15 per cent stake.

Mr Rushworth said that Pancontinental expects Apache to give the notices but that withdrawal from the JOA requires 60 days’ written notice and resignation as operator requires a 90 days’ notice.

He said that Apache’s withdrawal from L8 follows other Apache divestments around the globe, including Apache’s divestment of projects in the Gulf of Mexico which was announced in July this year, in Canada announced in August and in Egypt which was announced last month.

“The L8 Joint Venture will discuss the best way forward and determine the new operator of the Licence after it has been formally notified by Apache of its intention to withdraw. Subject to ministerial consent Pancontinental expects to increase its interest in the L8 licence on a pro-rata basis, at no material cost,” said Mr Rushworth.

Apache, in May this year announced that it planned to divest $4 billion in assets by year-end.

Bob Dye, senior vice president of corporate affairs at Apache on Tuesday said that the company had informed the Kenyan government of the move on Sept. 27.

Other companies that own exploration blocks or are prospecting for oil and gas in on the Kenyan coastline include FAR Limited which is listed on the Australian Stock Exchange.

In June this year, FAR Limited and Pancontinental announced that they are seeking to sell part of their exploration rights on a block off the coast of Kenya, to raise funds that will be used in drilling.

FAR Limited owns 60 per cent of block L6, which has three prospects; Tembo, Kifaru and Kifaru West, while the remaining 40 per cent of the joint venture is owned by Pancontinental.

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