A Review of the Nigerian Energy Industry

Statoil set to enter Kenya, with deepwater block

03 August 2012, Sweetcrude, NAIROBI – NORWAY’s Statoil is set to make its entry into Kenya with reports indicating possible award of a deepwater oil block to the company by the Kenyan authorities soon.

The Norwegian state oil company, which has already seen exploration success off neighbouring Tanzania, is serious about expanding its position in the hot East African play after a succession of major gas discoveries by several players in the region.

It ollows acreage awards off Kenya earlier this summer for rival majors Total and Eni, with the French giant picking up Block L22 and the Italian player signing production sharing contracts for blocks L21, L23 and L24, all located in the newly redemarcated Lamu basin.

Statoil is now in “advanced talks” for the award of deep-water Block L26 – the last remaining unlicensed tract off the country – that is set to be sealed soon, according to investment bank Morgan Stanley.

“We would expect additional new blocks to be put up for licensing in early 2013,” the US bank stated further in a Kenya research report, cited by the African Business Daily.

The country is mapping out new blocks for exploration as established players Tullow Oil and Anadarko Petroleum are set to surrender 25% of their acreage in a total of seven tracts under the terms of their PSCs.

The acreage currently being handed out is in water depths of between 3000 and 4000 metres, marking Kenya’s first major prospecting foray its deep-water play as Tullow’s recent Ngamia onshore find has whetted explorers’ appetite for the country.

Experts believe there is a high probability of a gas find off Kenya as the geology of its coastline is similar to some of the prospective blocks off Tanzania, where Statoil has already discovered a combined 9 trillion cubic feet of gas with its landmark Lavani and Zafarani finds.

Similar giant gas finds have been made by Anadarko and Eni off Mozambique.

Statoil is targeting frontier areas of the globe as part of a higher-risk international exploration strategy aimed at delivering high-impact discoveries of at least 250 million barrels of oil equivalent, which has been paying off with several major finds over the past year.

The company is already active in six African countries – Tanzania, Angola, Ghana, Libya, Egypt and Algeria.

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  • We wish Statoil the best of luck in Kenya, while hoping the Kenyan economy enjoys the benefits of increased revenue receipt.