Firms get extra time to search for oil and gas

The government has extended exploration contracts for two oil and gas companies to allow them complete acquisition of data to help in drilling.

Africa Oil Corporation of Canada and its exploration partner Tullow Oil Plc received the one year extension on blocks 10BB and 13T located in Lokichar basin setting the new dates for expiry of the contracts at July and September 2017 respectively.

This comes after Tullow announced a plan to reduce its global budget for exploration as falling prices of crude oil impacts on its operations.

“Due to the delays in acquiring the 3D seismic survey in Blocks 10BB and 13T, the Government of Kenya has approved a one year extension to the exploration terms for both blocks,” a statement accompanying Africa Oil’s financial and operating results for the third quarter reads.

The pair made the first discovery of oil in March 2012 at Block 10BB located in Turkana County. They plan to drill six new wells by mid 2016.

“We remain very bullish in not only the existing discoveries but in the remaining prospects in the discovered basin in Northern Kenya. Our goal is to open up at least one new basin and to move a significant number of barrels from prospective to contingent resources by the end of 2014 and into 2015 as we move the field development programme forward,” Africa Oil chief executive officer Keith Hill said.

The crude oil discovered in Lokichar to date is estimated to be in excess of 600 million barrels.

The area has a total potential of a billion barrels, according to Tullow which also says the resource meets the minimum threshold for commercial exploitation.

Last week, Kenya and Uganda awarded Toyota Tsusho — the trading arm of the Japanese carmaker — the contract to oversee design and a feasibility study for a crude oil pipeline between Hoima and the proposed port of Lamu in preparation to pump crude from both countries.