Business
Kenya on track to becoming East Africa’s first oil and gas explorer
Kenya imports all its fuel, almost 80,000 barrels of oil a day at a daily cost of more than US$8 million. It relies on exports such as coffee and tea to support the balance of trade in a US$37 billion economy, East Africa’s largest.
Tullow estimates it has found more than 300 million barrels of oil equivalent resources after making three discoveries in Kenya’s South Lokichar Basin. In February, Twiga became the first well in Kenya to produce oil at a commercially viable rate and has the potential to produce 5,000 barrels a day.
“After 50 years of disappointments, Tullow’s results in the Lokichar Basin have been the key breakthrough,” Oswald Clint, an analyst at Sanford C. Bernstein & Co., wrote in an August 16 report.
“Of 30 wells between 1960 and 1992, prior to Tullow’s entry, 13 were dry, 12 encountered non-commercial gas shows, and five encountered signs of oil staining or oil shows.”
Vivo Energy, a Shell joint venture with Vitol Group, as well as Total and KenolKobil Ltd. are the biggest suppliers of crude and petroleum products to the nation. Kenya Petroleum Refineries Ltd., the nation’s sole refinery, only refined crude from Abu Dhabi last year.
The discoveries have been made in the remote and underdeveloped Turkana region in the northwestern part of Kenya’s Rift Valley. Shipments will initially be made by truck or train for refining in Mombasa or exports. Once more fields are discovered and developed pipelines will be built.
Tullow and partner Africa Oil Corporation, plan to spend at least a year exploring for further deposits. They have two drilling rigs in Kenya and expect to secure one more later this year.
