China strikes wells of hope in Kenya

The base camp of a Chinese company prospecting for oil at Bassa, Cherab Division, 290 km north of Isiolo town. Photo/WILLIAM OERI

What you need to know:

  • Oil was discovered at Loperot, 100 kilometres South of Lodwar by Shell in 1992 and the Chinese are prospecting in the same basin.
  • Kenya is said to have a prospective 100,000 square kilometre oil field off-shore with between 600 billion and 6 trillion cubic feet of undiscovered natural gas.
  • The Chinese have identified 15 wells in Merti which they say show strong signs of oil but are narrowing down to one.

China has spent Sh3.7 billion in an aggressive search for oil in Eastern Province and says initial tests show “positive results”, the Sunday Nation can reveal.

Industry experts said Chinese optimism is not surprising: oil was discovered at Loperot, 100 kilometres South of Lodwar by Shell in 1992 and the Chinese are prospecting in the same basin.

Shell struck oil in the so-called Block 10B after drilling 11 dry wells. A dispute between the firm and the Kanu government halted exploration and the find was hushed up, but not before 19 litres of crude was extracted.

In 1993 the US government estimated that there could be 100 million barrels of oil (worth more than Sh800 billion) at the Kenyan Coast alone.

Woodside, an Australian company which prospected for oil off the Coast of Lamu, had calculated that four out of the seven possible wells, had more than 250 million barrels of oil, according to confidential documents seen by the Sunday Nation, and as much as one billion barrels for the whole of its block.

Woodside left after its $100 million drilling came up with nothing despite high expectation that they would strike at least natural gas.

Kenya, which some experts describe as a gas rather than oil region, has a prospective 100,000 square kilometre oil field off-shore with between 600 billion and 6 trillion cubic feet of undiscovered natural gas, according to one US estimate.

There was a gas explosion in a nearby coastal island during exploration and satellite maps seen by the Sunday Nation indicate seepage of oil on the sea bed.

Exploration efforts

A Chinese company, Bureau of Geophysical Prospecting, contracted by the government-owned China Offshore Oil Exploration Corporation, has been doing tests in Merti, 260 kilometres from Isiolo town.

The Chinese project is one of five exploration efforts currently going on in various parts of the country. It also comes in the face of a mounting energy crisis which has seen the cost of fuel rise 40 per cent in 12 months and the cost of electricity follow suit.

The Chinese have identified 15 wells which they say show strong signs of oil but are narrowing down to one. They are starting more exploration in neighbouring Marsabit District this month.

In April, Lundin Company, a Swedish multinational visited Kargi and North Horr areas and informed the local community that they were to start searching for oil in the area.

“They conducted meetings with the locals to inform them about their plans to search for oil,” a resident of North Horr Hilary Halkano told the Sunday Nation.

This will be the second exploration in Kargi, the first was in 1987. A company contracted to do the job left behind holes which locals say contain water poisonous to animals.

Kenya has a poor oil exploration record having only sunk 31 wells and none between 1992 and 2007. Sudan struck oil after drilling 78 times.

BGP Party Chief Mr Ye Dong Quan told the Sunday Nation that the company identified the wells after seismic equipment, which can peer 20 kilometres into the ground using shock waves, detected oil in some points.

Another engineer Mr Zhu Shanxin, who put the chances of striking commercially viable oil deposits at more than 50 per cent, said the wells must be draining into a major reservoir through underground oil rivulets and the task that remained was to establish which one among the 15 could be drilled.

“Some of the wells might be too shallow or might have small amounts of oil not commercially viable,” he said.

The team has to establish the density, quality and quantity of oil before an announcement is made. Sources claimed that the Chinese are to spend up to $60 million (Sh3.7 billion) on the project.

The company has state of the art equipment on site, including a truck for generating seismic shocks and mobile data processing laboratories.

“We would not have brought these machines here if we were not sure of striking oil. It is so expensive to maintain and run them,” Mr Quan said.

He said his company was prospecting for oil in 17 countries across the world, including Iran, Mexico, Pakistan, Nigerian and Sudan.

The provincial administration has laid out the red carpet for the Chinese firm, posting more than 30 Administration Police officers to guard the base camp and field equipment around the clock.

Greatest concern

Six chiefs from Isiolo and Wajir districts have also been provided with a patrol vehicle to help keep off herders from the area.

An oil industry insider, who spoke to the Sunday Nation in confidence, said Kenya does not seem to have a consistent prospecting strategy.

Whereas the country has a good standard contract for oil, it has none for gas, though it is thought to be a gas region.

The level of preparedness to deal with energy-hungry world powers such as China and the United States is also not there, the source added. China’s conduct in Sudan, has been condemned. But the greatest concern is the threat of war with Somalia over the demarcation of off-shore territory.

Kenya’s territorial waters are clearly defined in the South by treaty with Tanzania but to the North the border is still open to interpretation.

And given Somalia’s past territorial ambitions, if Kenya finds oil or gas off-shore then trouble with Somalia is almost inevitable.