Excitement as Tullow strikes oil in the first well in Turkana county

Kenya has discovered oil in Turkana in what is seen as a significant breakthrough in its exploration efforts.

The oil was found by Tullow Oil Plc, a British firm, which is also drilling in Uganda and termed the find beyond its expectations.

President Kibaki said the discovery was a major step towards making Kenya an oil producer.

“This is, however, a major beginning of a long journey to make Kenya an oil producer, which typically takes in excess of three years,” said the President during the announcement of the evaluation results of the performance of public agencies for the financial year 2011/2011 on Monday.

Tullow sunk only one well and made the discovery at Kodekode village in Nakukulas location in Turkana East District.

The company has been has been working on Block 10BB in Ngamia-1 Well and struck oil at a depth of between 846 and 1,041 meters. The company has a licence to prospect in five other blocks covering over 67,000sqkm (six times the size of the licences in Uganda).

“The oil that was discovered in Uganda is much lower than what has been discovered in Kenya,” Energy minister Kiraitu Murungi said, speculating that the deposits could be more than the hundreds of millions of barrels discovered in the neighbouring country.

The Energy minister was addressing journalists at the sidelines of the performance contracting event in Nairobi.

However, at a press conference later in the evening, Mr Murungi said the company will continue with the exploration in the next three years to find the right amounts that will make the oil find viable for commercial production.

“Over 10 similar prospects have been identified within this Rift sub-Basin and these initial results are encouraging for future drilling activities. More exploratory wells and seismic data are required to establish if the Ngamia-1 discovery will be of any commercial significance,” Mr Murungi said.

“Oil is a very expensive business venture and we therefore need hundreds of millions of barrels to be able to make it commercially viable,” said Mr Tim O’Hanlon, Tullow Oil’s Vice President for African business.

Kenyans will also have to wait longer to see their first processed oil. Uganda expects to start refining crude oil from its fields in 2014, eight years after it discovered it. It found oil deposits in 2006 in the Albertine basin along its border with the Democratic Republic of Congo and reserves of about 2.5 billion barrels have been confirmed.

Mr Murungi said the discovery comes after a frustrating search.

“Tullow has confirmed that Ngamia-1 exploratory well encountered in excess of 20 metres of net oil pay,” Mr Murungi said.

At least 31 dry wells have been dug in various parts of the country, including Isiolo and Lamu. The ministry has issued 38 blocks for exploration.

“The search was Tullow’s first exploration in Kenya. We invited them last year and they told us the rock structure in Turkana was similar to the one in Uganda,” said Mr Murungi.

The news excited financial markets in Britain after Tullow Oils shares strengthened 4 per cent last evening.

This comes at a time when Kenya has increased its activities in exploration after natural gas was found in Tanzania and Mozambique.

“Immediately Uganda found oil, we knew that we were not far from it. With this find, we will now intensify activities in the blocks that we have to allow us join the league of oil producing nations such as Libya, Abu Dhabi, and Iran,” Mr Murungi said.

Oil is Kenya’s largest import item. It is the main factor that was blamed on last year’s depreciation of the shilling and the country’s widening import bill that has put pressure on the current account.

Commercialisation will be a major relief for the Central Bank of Kenya, which has been under pressure to keep the shilling stable despite a widening trade deficit.

Mr Murungi also revealed that his ministry was revising the Petroleum Exploration Act to ensure that revenue sharing was in line with the Constitution. He said the ministry had sent staff for training in the countries that have made similar discoveries to prepare them for mass production.

“We are well aware of the curse that comes with oil discoveries. For us in Kenya, we want it to be a major blessing. This will only happen if we ensure that both the interests of the community that the find is made, the national government and the discovering company are taken on board,” Mr Murungi said.

In a statement, Tullow Oil said the oil find was beyond their expectation.

“This is an excellent start to our major exploration campaign in the East African rift basins of Kenya and Ethiopia,” Mr Angus McCoss, the company’s Exploration Director said.

“To make good oil discovery in our first well is beyond our expectations and bodes well for the material programme ahead of us. Tullow is working closely with the Government and people of Kenya as a committed long term partner to unlock the oil potential of the region,” added Mr McCoss.

He went on; “We look forward to further success as seismic and drilling activities continue to gather pace.”The company said the discovered oil had similar properties to the light waxy crude discovered in Uganda.

“The well, located in the Turkana County of Kenya Block 10BB, was drilled to an intermediate depth of 1,041 metres and has been successfully logged and sampled.”

Moveable oil with an API greater than 30 degrees has been recovered to surface.”

The company said the Ngamia Well was the first prospect to be tested as part of a multi-well drilling campaign in Kenya and Ethiopia.

“Many leads and prospects similar to Ngamia have been identified and following this discovery the outlook for further success has been significantly improved,” the firm added.