Kenya's environmental watchdog has given a British oil and gas firm the greenlight to start Sh16.4 billion ($159 million) drilling for commercial gas on Pate Island, Lamu county.
The National Environmental Management Authority (Nema) has cleared Zarara Oil and Gas Ltd - a fully-owned subsidiary of Midway Resources International (MRI) - to start drilling one of two wells believed to contain huge natural gas deposit on the archipelago.
The Energy Ministry had set strict deadlines for the firm to explore for gas at Pate 2 well before end of the year and later Pate 3 for power generation.
When contacted by the Business Daily, Lamu County Nema director of environment - Mr Salim Ahmed Bashir - confirmed that Zarara has been licensed to undertake the drilling exercise.
“Yes, I am aware they have been issued with the licence from our headquarters (in Nairobi) because such activities are normally handled at the highest level,” said Mr Bashir.
He said that the firm has also compensated land owners in the area, paving way for exploration of gas deposits in the two blocks.
“There was a lease agreement between the company and land owners where parties settled on compensation agreement,” he added.
Reports indicate that Zarara has mobilised Greatwall Drilling Company Ltd’s drilling rig to start sinking of Pate 2 well that is expected to take 120 days.
MRI has a 75 per cent stake in the two blocks while Swiss Oil Holding controls 15 per cent, with the remaining ten per cent shares owned by the Kenyan government.
Two years ago, the government granted Zarara Oil and Gas an 18-month licence extension to undertake drilling works on Blocks L4 and L13.
However, the quantity of gas deposits will only be ascertained after intense drilling, Zarara country manager Peter Nduru said.