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Striking ‘Black Gold’ destined to change Kenya’s future

Kenya EconomyKenya has announced its first successful discovery this year in Turkana and offshore after a long and strenuous search that took six decades. This major breakthrough will definitely prove to be a milestone for the country.

The discovery of about 52 net metres of natural gas in Mbawa prospect, an offshore block off the coast of Lamu, has confirmed the fact that there are viable hydrocarbon deposits in the Tertiary Rift.

The discovery has also put to rest beliefs that the region has no hydrocarbons after Australia’s Woodside Petroleum Ltd struck a dry well at its Pomboo -1 off the coast in 2007.

Kenya’s four major basins – Anza, Lamu, Rift, and Mandera which are the four sedimentary basins of Lamu, Mandera, Anza and Tertiary Rift – have a combined surface area of about 485,000 square kilometres.

While the commercial value is awaited in 2013, what is more important now is to see how the discovery of oil will transform the economic, energy, and infrastructure scenario which will promote the country’s rapid growth.

Martin Mbogo, the general manager of Tullow Kenya, the oil exploration company, said that if the deposits were found to be commercially viable it would enable the economic development of Kenya to go parallel along with Vision 2030 which aims at turning Kenya into a middle-income country within the next 18 years.

Industry experts are of the opinion that when the oil is found to be in adequate and exploitable quantities, the government has to first invest in infrastructure to bring the oil to the market. The next phase of development would be the production stage – the level at which Uganda (which discovered oil six years ago) is currently at.

But multiple wells would need to be drilled to confirm the commercial viability of the oil discoveries both in the onshore Block 10BB and offshore Block L8, even though the discoveries of both crude oil in the onshore, and natural gas in the offshore is a confirmation of the fact that there are active and working petroleum systems in Kenya’s sedimentary basins.

Mr. Mbogo also said that producing oil requires investment, infrastructure and a compelling commercial reason, and the results of two wells cannot give a complete picture of the basin’s potential and so more wells would be drilled and more testing and appraisal work would be done.

Tullow plans to explore the Lokichar sub-basin and other prospects that have been mapped in the Tertiary Rift while the US independent oil major, Anadarko Corporation last week drilled two ultra-deep offshore wells off the coast of Lamu, and US explorer Apache Corporation is continuing with drilling the offshore well in the Mbawa prospect.

The search for oil would be escalated with five new onshore and offshore blocks being redrawn by the Survey of Kenya.

But, experts want policy makers to develop comprehensive oil and gas policies, strategies, legal, and institutional framework that is transparent and robust as Kenyans are intended to be the key beneficiaries of these natural resources.

The industrial leader, George Wachira, said that with the discovery of oil a comprehensive master plan for petroleum now becomes a priority.

Eric Aligula, head of infrastructure at KIPPRA, a public policy think tank, is encouraging policy makers to fast-track investments in the sector to link production areas and demand areas in the sector. He added that dealing with infrastructure was the biggest challenge in the oil sector.

Industry expert Mwendia Nyaga was of the opinion that any investment in the right petroleum infrastructure to build a strong oil and gas industry was now justified.

The search for the ‘black gold’ has taken a long time and the perceived high geological risk in Kenya was for the last five decades, a major deterrent that turned away major oil companies who own the risk capital for investing in oil and gas exploration. Major exploration companies were not interested in Kenya due to the history of hitting dry wells and hence they preferred to invest in countries with proven petroleum reserves.

From the year 1960 to 2010, 32 oil exploration wells had been drilled but all of them were classified as dry although 18 of them showed the presence of oil and gas.

Of the 46 petroleum exploration blocks, nine of them were created after the March 2012 discovery at Ngamia 1 well – and 44 are licensed to international oil companies. A number of well-known international oil companies are interested in the country’s petroleum exploration programme.

Image courtesy: FreeDigitalPhotos.net

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