Canadian-owned Africa Oil Corporation, Tullow’s partner in Turkana’s exploration fields, has received approval to sell half of its stake in three blocks to Maersk Oil & Gas of Denmark.
The deal will see Africa Oil raise some Sh35.7 billion that will be utilised for further exploration.
Under the sale agreement, also known as farm-out in industry language, Africa Oil will transfer half of its interest in Blocks 10BB, 13T and 10BA in Kenya and the Rift basin and South Omo blocks in Ethiopia.
Tullow and Africa Oil currently co-own the three blocks on an equal basis.
The companies made the first oil discovery in Block 10BB in March 2012 and significant deposits of crude oil have been found around the three blocks since then.
“This transaction puts Africa Oil in the position of not requiring any additional equity financing prior to first oil and will allow us to weather the current difficult oil price environment should it continue into 2016,” said Africa Oil president and chief executive officer Keith Hill in a statement.
Since mid-2014, crude prices have plunged to as low as $32 per barrel, dashing hope for the commencement of oil production in frontier regions as international oil and gas companies shift focus to fields where production is already going on.
In Kenya, industry players estimate that exploration reduced by more than half last year due to the fall in the global prices, affecting other supporting industries such as transport, security and catering.
Last year, Africa Oil and its partner, Tullow Oil, reduced the number of rigs operated in Kenya from four to one.
It is feared that the beginning of oil production in Kenya could be delayed following the slowed down exploration.
“We feel Maersk will be an excellent partner in terms of technical and financial strength and experience critical to moving the development project forward,” said Mr Hill.
Last year, Africa Oil reported that it had spent Sh20 billion in drilling, exploration surveys and field development studies in the nine months to November.