Kenya begins oil exploration in disputed wells in Lamu Basin

By JOHN MUTUA

Kenya has stepped up oil and gas exploration in the Lamu Basin after rejecting a ruling on a four-decade maritime dispute with Somalia.

Petroleum Commissioner James Ng’ang’a said ENI Kenya Business Venture, formerly Agip, started drilling the Mlima-1 well, also known as Block L11B, last month.

This follows seismic surveys which revealed that the area has oil and gas potential. The company expects to release the block’s commercial viability results filings in two months.

“The drilling of the well was completed on December 28, 2021 and is expected to take two months,” Ng’ang’a said.

Oil and gas explorers use seismic surveys to produce detailed images of rock types and location below the earth’s surface and to determine the size of potential oil and gas reservoirs.

Ng’ang’a added that the country will abandon the venture if the well is not viable upon completion of drilling and mining appraisal within 60 days.

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Since April last year, Kenya has been mapping oil and gas deposits in the Lamu Basin despite bordering Somalia.

The basin stretches from the Kenya-Somalia border to the border with Tanzania, and Kenya is banking on its vast area to secure oil producing wells.

However, the basin is in disputed territory with Somalia which has been the source of a diplomatic dispute between the two countries.

Somalia took the case over the 100,000 square kilometer coastal strip believed to harbor oil, natural gas and mineral reserves to the International Court of Justice (ICJ) in August 2014.

Kenya has accused Somalia of auctioning off exploration rights in the disputed Indian Ocean maritime territory, and Nairobi recalled its ambassador to Mogadishu two years ago.

Kenyan President Uhuru Kenyatta said last year that the country would not cede even an inch of the disputed area.

The country rejected the maritime dispute ruling in its entirety and accused the ICJ of bias.

Kenya wrote to the United Nations in 2016 asking for the authority and expertise to map its territorial waters to allow it to exploit the oil, natural gas and mineral reserves believed to lie beneath the seabed in Kenya. Indian Ocean.

But last October, the ICJ ruled in favor of Somalia and rejected Kenya’s claim that there was an agreed maritime boundary between the two countries, and instead drew a line that divides the disputed area in two.

Long wait for oil

The wells in the Lamu basin offer Kenya another chance to become an oil-producing country after the long wait for the commercialization of the South Lokichar venture in Turkana County.

Kenya first announced the discovery of oil in Blocks 10BB and 13T at Turkana in March 2012, raising hopes of petrodollars to fuel economic growth. But the country has yet to fully commercialize crude oil a decade later.

The country had set December 2021 as the deadline for Tullow to present a full investment plan for oil production in Turkana or risk losing a concession on two exploration fields.

Last October, Tullow presented a revised development plan for oil production in the southern Lokichar basin.

The plan includes land for the development of a pipeline and an oil processing facility that will pave the way for compensating 516 landowners in Turkana County to relocate and vacate the area. The pipeline and oil processing facility in the basin includes a $3.4 billion investment for upstream activities.

Tullow said land acquisition issues, unfavorable global oil prices since 2014, a tax dispute and Covid-19 disruptions have delayed commercialization of the Turkana oilfields.

Global oil prices hit a three-year high of $80 a barrel last September.

When production starts, a large percentage of the profits will go towards production and shipping costs.

Tullow will recover its exploration costs from crude sales, which will eat away at the country’s revenue from the raw material.

British oil consultancy Gaffney Cline Associates, in an audit last year, increased Kenya’s commercially extractable oil volume to 585 million barrels, from the previous estimate of 433 million barrels.

Kenya has four oil exploration basins including Lamu. The others are Anza, Mandera, and Tertiary Rift Basin.

Petroleum Commissioner James Ng’ang’a said ENI Kenya Business Venture (BV), formerly Agip, started drilling the Mlima-1 well, also known as Block L11B, last month.

This follows seismic surveys which revealed that the area has oil and gas potential. The company expects to release results from the block’s deposits in terms of commercial viability within the next two months.

“The drilling of the well was completed on December 28, 2021 and is expected to take two months,” Ng’ang’a said.

Oil and gas explorers use seismic surveys to produce detailed images of different rock types and location beneath the earth’s surface and to determine the location and size of potential oil and gas reservoirs.

Mr Ng’ang’a added that the country would abandon the venture in case the well was found to be dry upon completion of drilling and mining appraisal within 60 days.

Since April last year, Kenya has been mapping oil and gas deposits in the Lamu Basin despite bordering Somalia.

The basin stretches from the Kenya-Somalia border to the border with Tanzania and the ministry is banking on its vastness to secure Kenya’s oil producing wells.

But the basin is in disputed territory with Somalia which has been the cause of diplomatic rows between the two countries.

Somalia took the case over the 100,000 square kilometer coastal strip believed to harbor oil, natural gas and mineral reserves to the International Court of Justice (ICJ) in August 2014.

Kenya has accused Somalia of auctioning off exploration rights in the disputed Indian Ocean maritime territory, with Nairobi even recalling its ambassador to Mogadishu two years ago.

President Uhuru Kenyatta said last year that Kenya would not cede even an inch of the disputed area, underscoring Kenya’s determination to protect an area that is essential to becoming an oil-producing nation.

The country rejected the maritime dispute ruling in its entirety and accused the International Court of Justice of bias.

Kenya wrote to the United Nations in 2016 asking for the authority and expertise to map its territorial waters to allow it to exploit huge reserves of oil, natural gas and minerals believed to lie beneath the seabed. Indian Ocean sailors.

But the ICJ last October ruled in favor of Somalia and rejected Kenya’s claim that there was an agreed maritime boundary between it and Somalia and instead drew a line that divides the disputed area in two.

The Lamu Basin wells offer Kenya another chance to become an oil-producing nation after the longer-than-expected wait in commercializing the South Lokichar venture.

Kenya first announced the discovery of oil in Blocks 10BB and 13T at Turkana in March 2012, raising hopes for the petrodollars needed to fuel economic growth. But the country has yet to fully commercialize crude oil a decade later.

The country had set December 2021 as the deadline for Tullow to present a full investment plan for oil production in Turkana or risk losing the concession on two exploration fields in the region.

Tullow presented a revised development plan for oil production in the southern Lokichar basin in October last year.

The plan includes land for the development of a pipeline and an oil processing facility that will pave the way for compensating over 516 landowners in Turkana County needed to relocate and vacate the area.

The relocation of landowners will pave the way for the planned development of a pipeline and oil processing facility in the basin, which includes a $3.4 billion (373.6 billion shillings) investment for operations. upstream.

Tullow said the land acquisition is being hit by unfavorable global oil prices since 2014, a tax dispute and Covid-19 disruptions have delayed Kenya’s bid to commercialize the Turkana oilfields.

Global oil prices hit a three-year high in September last year at $80 (8,800 shillings) a barrel, underscoring Kenya’s lucrative oil trade.

Tullow, however, says more than 80% of Kenya’s estimated 2.85 billion barrel oil reservoir remains inaccessible to commercial exploitation due to limitations in extraction technology highlighting the vast resources needed to join the league. oil-producing countries.

Kenya will not, however, earn the full amount when production begins, with a significant percentage going toward production and shipping costs.

Tullow is also entitled to recoup its exploration costs from crude sales, which further eat away at the country’s revenue from the raw material. Countries with oil deposits periodically update estimates of recoverable reserves as extraction technology evolves.

British oil consultancy Gaffney Cline Associates (GCA) last year increased the volume of commercially extractable oil from Kenya to 585 million barrels from the previous estimate of 433 million barrels.

Kenya has four oil exploration basins including Lamu. The others are Anza, Mandera, and Tertiary Rift Basin.

About Bradley J. Bridges

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