The discovery of oil and gas in Kenya provides a great opportunity for the country to reposition itself as an economic hub.
The interest in Kenya’s upstream oil and gas sector developed significantly following oil discoveries in Uganda and recent gas discoveries offshore East Africa.
The World Bank reports that Kenya’s oil discoveries could drive the country’s economic growth to levels experienced by Uganda and Tanzania adding that the oil and gas sector might be a catalyst for Kenya to achieve the goals of its national economic blueprint.
But is Kenya reaching its full potential in terms of extraction in its untapped oil fields?
The country is endowed with substantial untapped mineral resources; this follows decades of geological research and exploration — unearthing economically feasible regions.
According to Africa Oil Corp, Kenya may be sitting on more oil than previously believed.
Following a new discovery, the Canadian energy group Africa Oil added 150 million more barrels of oil to its reserves in the Lokichar Basin in the country’s north—24 per cent more than earlier estimates. Africa Oil’s reserves now stand at a total of 766 million barrels.
The updated figure follows discovery of “an active petroleum system with significant oil generation” in Kerio Valley, also in northern Kenya, by British energy group Tullow Oil.
Tullow and Africa Oil have been exploring the basin, believed to have as much as 1 billion barrels of oil that could make Kenya an oil exporter in the future.
The recent developments in the oil industry have put Kenya on an international platform with various foreign companies showing interest in oil exploration.
Kenya currently has a total of four petroleum sedimentary basins including the Lamu Basin, Anza Basin, Mandera Basin and tertiary Rift Basin covering a total surface area of 485, 000 km.
The four petroleum basins have been subdivided into licensed blocks, 36 blocks have been licensed to 18 international oil companies and block 14T to the National Oil Corporation of Kenya.
These discoveries are evidence for active and working petroleum systems.
According to James Mbugua Ng’ang’a, the principal superintending geologist, State Department of Petroleum observed during a past workshop that they license blocks for various phases of exploration.
“After every phase, the company is required to relinquish 25 per cent. From those relinquished parts we create some more blocks.”
Crude oil has been discovered in Ngamia, Amosing, Twiga, Ewoi, Etuko, Ekunyuk, Ekales, Etom and Agete. Gas has been discovered in Mbawa and Sala while in Sunbird, both oil and gas has been discovered.
Working hydrocarbon systems have been discovered in the Cheptuket exploration well in Kenya’s Kerio Valley.
“Before you allow a company to develop a field, it has to submit a development plan where we have people on board following the matter. The draft field development plan was submitted in December 2015 and it is being updated as further data is availed. The final field development plan is to be submitted for approval by the government.” He said.
However, participation in the sector is broadening, in a May 2016 report by Oxfam, the NGO stated that Kenya had marked 46 petroleum blocks and licensed 41 to oil exploration and production companies.
The NGO noted that ownership information is difficult to come by, but reported that some 35 companies, whether operators or joint venture partners, held a stake in at least one block in the country as of January 2016.
Recently, the Ministry of Petroleum and Mining said that 200 wells are planned to be drilled over the next two years.
Petroleum Principal Secretary Andrew Kamau said that in an approach geared toward major production, Kenya is looking to develop the South Lokichar Basin.
“We are in the first phase where we have done the economic benefit by looking at the recoverable reserves. The next steps would be to build the pipeline and facilities that will take the oil down to Lamu for export,” Kamau noted in a statement on April 22.
Commercialization
With the government planning to commercialize oil export by 2022, the oil and gas sector is expected to be Kenya’s fourth highest foreign exchange earner after tea, coffee and tourism.
The long-term plan is to transport crude oil through a pipeline along the LAPSSET Corridor, currently under development.
The Ministry of Petroleum and Mining said it is targeting production and stockpiling of at least 400,000 barrels of oil before commencing exporting.
Kamau said such a quantity, although modest in volume, was still ideal, considering it was the country’s first oil export consignment.
While only 10,000 square kilometers of its 85,000 square kilometers of oil and gas basin have been explored only 12 per cent found in the country has been revealed by the Kenyan government.
If the reserves are tapped to drive economic activities, this leaves a great potential for growth.
Currently, Kenya is using the Early Oil Pilot Scheme, which will soon be followed by the Full Field Development phase, to establish itself as a crude oil exporter in the region and provide valuable information for future exploration and development.
The pilot scheme will also provide substantial information for future prospects, exploration, and development.
