Kenya might have more oil than Uganda

By Njiraini Muchira
Kenya is set to overtake Uganda in six years as East Africa’s top oil producer if the latest results from drilling in Turkana County are anything to go by.
Preliminary results from samples taken by British firm Tullow Oil from its Ngamia-1 exploration well in the arid region appear to indicate that Kenya has significantly more oil underground than neighbouring Uganda and Ghana.
This follows discovery of 100 metres of oil-bearing columns in the well that has now been drilled to a depth of 1,515 metres.
When President Kibaki first announced the discovery of oil in March, the same well in Block BB had been drilled to 1,041 metres, and had encountered 20 metres of net oil pay (oil columns). Prime Minister Raila Odinga on Monday announced the latest outcome from the ongoing exploratory drilling. In Uganda, proven oil deposits in the Lake Albert Rift Basis stand at 2.5 billion barrels while in Ghana has 2.9 billion barrels worth of oil in two offshore fields. This, however, is a far smaller quantity compared to the 76.2 billion barrels in Libya, 37.2 billion barrels in Nigeria and 6.6 billion in South Sudan.
“On 26 March we announced 20 metres of oil bearing columns. Now it is 100 metres of oil bearing columns and it means we could be having more oil than Uganda and Ghana,” said the PM while giving an update on the drilling of Ngamia-1 exploration well.
He added that while the results are encouraging and good news for Kenya, it is still too early to ascertain the total oil deposit in Ngamia-1 and the basin as a whole.
Tullow Oil, which discovered the oil deposits in Turkana County, intends to drill the well to a total depth of 2,700 metres over the next five weeks.
production begins
So far, Tullow Oil has sunk $58 million (Sh4.7 billion) into the project. Ownership of Ngamia-1 drilling project is split fifty-fifty between Tullow and Africa Oil..
Although drilling was to have ended in April, Tullow Oil, which discovered the black gold in Uganda and Ghana, said it pushed forward the deadline because it had to construct a sidetrack and also carry out extensive sampling of deposits.
Going by activities in Ghana, where commercial production commenced in 2010 and where oil generates $1 billion (Sh83 billion) annually, Kenya could be staring at a bonanza when production begins in the next six years.
“Exploration campaigns can last several years and the timeframe from exploration to realising production revenue in an onshore environment is typically in excess of six years. We therefore remain cautiously optimistic,” said Raila who has a degree in mechanical engineering.
He explained that the Government would install proper measures to guarantee Kenya avoids the curse of oil that has hit many producing countries in Africa. In particular, the Government will be cautious on how the oil billions are shared to ensure Kenyans, the local Turkana community and prospector Tullow Oil benefit.
According to the production sharing contract signed between the Government and Tullow Oil, Kenya will keep 55 per cent of the revenues while Tullow will get 45 per cent.
But Tullow’s share will drop gradually over five years to 22 per cent, by which time it hopes to have recouped much of its initial investment in the project.
In the case of windfall profits, the Government will get 26 per cent with Tullow keeping 74 per cent, while in in terms of cost recovery, Tullow oil will get 55 per cent and the Government 45 per cent.
“For us revenues from oil production would have to be utilised in a manner that would boost the ongoing economic and social transformation agenda as articulated in the Vision 2030,” said the PM who was accompanied by Energy Minister Kiraitu Murungi.
signed agreement
He said the Petroleum (Exploration and Production) Act of 1986 would be amended to conform to best international practice and the Constitution. The process of building an oil pipeline from the proposed Lamu to South Sudan to the proposed Lamu Port will be accelerated to facilitate the transportation of the oil he noted.
So far the Government has signed an agreement with South Sudan for the implementation of the project estimated to cost $2 billion.
Marsabit County
Upon completion of the Ngamia-1 well, Tullow Oil plans to shift its drilling rig to Twiga-1, also in Turkana County, located inn Block 13T some 31 km north-west of Ngamia-1.
The company is also mobilizing a second rig to accelerate drilling in Paipai in Block 10A in Marsabit County.
The oil prospector has 50 per cent interests in seven onshore blocks in Kenya and Ethiopia.

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