French oil company TotalEnergies dodged a bullet in its quest to find commercially viable oil deposits in Kenya after three blocks that it sold to QatarEnergy returned nil results for the black gold.
The firm has disclosed the sale of its interest in the Lamu Basin blocks to the Qatari firm in September 2021, barely six months before the wells were declared dry, saving it billions of shillings in exploration costs.
TotalEnergies did not reveal how much QatarEnergy paid for the acquisition of its 11.25 percent stake in the three blocks.
But the move to sell the blocks highlights the mixed fortunes for the French major in its quest to find oil in East Africa’s biggest economy.
“TotalEnergies finalised the sale to QatarEnergy of a part of its interest in offshore blocks L11A, L11B and L12 where an exploration well was finalised in March 2022 with a negative result,” the French major says in disclosures for the 2022 financial year.
“In November 2022, the company [TotalEnergies] initiated a procedure to withdraw from these licenses subject to the authorities’ approval,” the firm says in the reports released last week.
QatarEnergy started conducting seismic surveys on the three blocks to lay ground for its oil exploration in December 2021 but declared them dry four months later.
The three blocks in the Lamu Basin cover approximately 15,000 square kilometres, with water depths estimated at 1,000-3,000 metres.
However, TotalEnergies still holds a significant chunk in the joint venture for the commercially viable 10BB and 13T blocks in Turkana.
The French firm is jointly undertaking exploration on the two blocks with Tullow Oil Plc and Africa Oil for the project whose commercialisation has been derailed by a lack of a field development plan (FDP).
The three firms were expected to submit a fresh FDP for the Turkana oil project late last year but failed to beat the deadline, prompting them to request a fresh submission cut-off date.
The FDP is critical for the government to make a final decision on whether to allow the joint venture to start commercial production and exportation of Kenya’s oil.
“On blocks 10BB and 13T, TotalEnergies is studying the different options to monetise the oil discoveries made,” the French firm added.
TotalEnergies and the Toronto-listed Africa Oil each own a 25 percent stake in the two blocks while Tullow owns 50 percent.
The French oil major had earlier said it planned to sell up to half of its 25 percent share while Tullow wanted to sell a significant chunk of its 50 percent interest after it ran into financial headwinds.
TotalEnergies, Tullow Oil and Africa Oil had up to December 2021 to present the FDP or risk losing concession on two exploration fields.
The three firms have since been granted two more extensions, which have slowed down Kenya’s quest to join the league of oil exporters.
The onshore Kenyan oilfields are expected to produce up to 100,000 barrels per day, bringing Kenya closer to its neighbour Uganda, which is fighting to be the first East African oil exporting nation.
Kenya made an attempt to start exporting oil through the controversial early oil export scheme where oil was trucked from Turkana fields to Mombasa.
TotalEnergies is the lead investor in Uganda’s oil dream and a significant financier of the $5 billion East African Crude Oil Pipeline that will link the nation to Tanzania.
Uganda discovered commercial reserves of oil nearly two decades ago but the lack of critical infrastructure like pipelines has hampered the commercialisation of the commodity.
TotalEnergies was taken to a French court by climate activists who argued that the pipeline poses a threat to people, wildlife and plant species across the two nations.
But the court last month declined to fast-track the case that was filed in 2019, saying it should be examined in depth to determine if the charges against TotalEnergies are valid.