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Qatar Petroleum signs deal on three Kenyan offshore blocks

A truck transports oil from Turkana County to Mombasa
A truck transports oil from Turkana County to Mombasa. FILE PHOTO | NMG 

Qatar Petroleum, a State-owned company of the energy-rich Arab nation, has acquired a block of Kenya’s offshore oil and gas exploration fields, adding to a growing list of global corporations seeking to exploit huge fuel deposits believed to be underneath the Indian Ocean seabed.

In a statement Wednesday, the company said it has signed an agreement with French multinational oil and gas company Total and its Italian peer Eni to take over three offshore exploration blocks in the Lamu Basin.

In the deal that is subject to regulatory approvals by Kenyan authorities, Qatar Petroleum said it had acquired a 25 percent stake (13.75 percent from Eni and 11.25 percent from Total) in three blocks located in the offshore Lamu basin.

The three offshore blocks are situated in what is considered to be a frontier and largely unexplored area in the Lamu basin. They have a total area of approximately 15,000 square kilometres, with water depths ranging from about 1,000 metres to 3,000 metres.

“We are pleased to sign this agreement to participate in exploring these frontier offshore areas in Kenya and to further strengthen our presence in Africa,” said Qatar’s Minister of State for Energy Affairs Saad bin Sherida al-Kaabi, who is also the chief executive of Qatar Petroleum in a statement.

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“We hope that the exploration efforts are successful, and we look forward to collaborating with our valuable partners Eni and Total, and the Government of Kenya in these blocks.”

Following the deal, Eni (the operator) will have a 41.25 percent stake in the block while Total’s stake will stand at 33.75 percent. The financial details of the transaction were not disclosed.

“In line with its growth strategy, this opportunity strengthens Qatar Petroleum’s position in the exploration of frontier basins with significant hydrocarbon resource potential,” said Mr al-Kaabi.

Kenya in 2016 put a freeze on the issuance of new licences to exploration companies as it linked the move to a major drop in oil prices that resulted in low levels of investments in the industry.

Tuesday’s announcement by the Qatari firm signals the lifting of the ban.

Petroleum ministry officials sought by the Business Daily for comment were unavailable by the time of going to press.

63 blocks

Kenya has about 63 gazetted oil blocks, 27 of which have been assigned to 15 oil companies for prospecting including the State-owned National Oil Corporation of Kenya (NOCK).

Kenya has been planning to auction about 36 other blocks to bidders.
Qatar, a country of 2.6 million people where citizens make up just 10 percent of the population, discovered its offshore North Field gas deposit in 1971, the same year it became independent.

It took years for engineers to discover the field’s vast reserves, which shot Qatar to number three in world rankings, behind Russia and Iran, with which it shares the North Field.

It also made the country wealthy, sparking its successful bid for the 2022 FIFA World Cup. Qatar produces about 600,000 barrels of crude oil a day, making it Opec’s 11th-biggest producer.

Kenya and Qatar formally established diplomatic relations in December 2003.

Data from the Kenya National Bureau of Statistics shows that in 2018, Kenya’s total exports to Qatar and other Middle East countries increased to Sh63.7 billion from Sh51.37 billion in 2017.

The total imports from Qatar and other Middle East countries rose by 21 percent to Sh355.7 billion last year.

Oil production

Kenya and British oil company Tullow had expected to ship the first cargo of crude oil production from the South Lokichar oil fields this year, ahead of a major crude production in 2022.

The Ngamia and Twiga wells are expected to produce between 60,000 and 80,000 barrels of oil per day.

Kenya is separately battling a court case before the UN’s top court over a maritime border dispute between it and Somalia.

Somalia has taken Kenya before the International Court of Justice (ICJ) seeking to reclaim an area of the Indian Ocean bordering Kenya’s territorial waters.

The area with potential reserves of oil and gas stretches more than 100,000 square kilometres.

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