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OIL AND GAS EXPLORATION AND INVESTMENT
OPPORTUNITIES IN KENYA
BY
HON KIRAITU MURUNGI, EGH, MP
MINISTER FOR ENERGY
REPUBLIC OF KENYA
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CONTENTS GENERAL ASPECTS ABOUT KENYA
SEDIMENTARY BASINS
STATUS OF OIL EXPLORATION ACTIVITIES LECENSING OF PETROLEUM EXPLORATION
EXPECTED MINIMUM CONTRACTOR
OBLIGATIONS
COST AND PROFIT OIL PROVISIONS
REVIEW OF POLICY AND LAW
CONCLUSIONS
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Lies on the Eastern part ofr ca, as r e e qua or.
Area: 582,646 sq.km
Population approximately 40m on
Coastline: About 550 km long
Deep water Harbour in
Beautiful Coastal White SandBeaches
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SEDIMENTARY BASINS
Kenya has four(4) sedimentary basins with good
po en a or scovery o y rocar ons. e
basins are: Lamu, Mandera, Anza and Tertiary Rift.
,
Lamu Basin:
sub-basins.
Geology is similar to the coastal
basins of Tanzania and Mozambi ue where
commercial gas deposits have so far beendiscovered.
Sediment thickness of about 13,000m
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SEDIMENTARY BASINS CONT:
Anza Basin:
ns ore as n w c s a con nua on o e
Central African Rift System into Kenya fromSouth Sudan where commercial oil reservesare proven and production is on stream.
Sediment thickness of about 10,000m
Mandera ns ore as n w ose geo ogy ex en s n o e
Luug-Mandera Basin of Somalia and OgdenBasin of Ethiopia.
Sediment thickness of about 10 000m
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SEDIMENTARY BASINS CONT:
Tertiary Rift Basin
Essentially onshore basin which in partextends into two major Lakes namely;Lake Turkana in the North and Lake
c or a n e es ern arm o e r .
Youngest of the four basins whose
geology similar to Ugandas Albertine
Sediment thickness of about 4000m
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SEDIMENTARY BASINS MAP
Lamu Basin 261,000km2
Mandera Basin 43,000km2
Anza Basin 81,000km2
Tertiary Rift Basin 100,000km2T
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BLOCKS BY BASINBasins currently sub-divided into 46 Exploration
blocks and 45 licensed. The blocks are divided
e ween as ns as o ows:
(1) Lamu Basin- 31 blocks:
-
-7 onshore and
-6 both offshore and onshore
(2) Mandera Basin- 3 blocks all onshore
3 Anza Basin- 4 blocks all onshore
(4) Tertiary Rift Basin- 8 blocks with 10BA, 10BB
partly into Lake Turkana and
12Bpartly into Lake Victoria
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STATUS OF EXPLORATION ACTIVITIES
44 Blocks are licensed to 23
International Oil Companies (IOCs) andone to NOCK.
as follows:
, ,L11A, L11B and L12, Lamu Basin
Company has finalized plans to mobilize
blocks L7 and L12 by January, 2013.
2. Apache- One offshore Block L8:
exploratory well in Mbawa Prospect inAugust 2012. 9
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EXPL RATI N ACTIVITY STAT S C nt :
3. Tullow Oil Operates 6 Blocks 10A Anza Basin,, , ,
Basin Company has drilled one crude oil discovery
well Ngamia 1 in Block 10BB out of the 10prospec s n oc s an .
Well drilled up 2340m and a Net Oil Pay column
of more than 100m has been confirmed
Twiga 1 exporatory well in Block 13T in August2012.
Drilling of more wells to be done to ascertain the
A seperate rig has been mobilized to drill anexploratory well in Block 10A Anza Basin inSeptember, 2012.
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EXPL RATI N ACTIVITY STAT S C nt :
4. BG Grou - O erates 2 dee offshoreBlocks L10A and L10B.
After being licensed in May 2011, has alreadycompleted acquisition, processing and
seismic data and another 2500km2 3D seismicdata.
5. Other Com anies 10 companies at various stages of seismic
data acquisition and interpretation.
10 companies recently licensed between
ay an u y, , ocommence operations on or beforerespective Effective Dates.
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CURRENT LICENSED BLOCKS
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LICENSING OF BLOCKS
Licensing of petroleum exploration
Blocks is governed by the Petroleum
Exploration and Production Act Chapter
308 of the Laws of Kenya.
Production Sharing Contract (PSC)
Licensin of blocks is conducted onbasis of an open door policy and
analysis of Financial and Technical
. Due encouraging results it is intended
to introduce Licensing/ bidding
rounds.
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LICENSING OF BLOCKS Contd:
The three exploration periods
are:
(i) Initial Exploration Period:
up to two (2) Years for onshore
three (3) years for deep offshore
blocks(ii) First Additional Exploration Period
of two (2) years
period of two (2)years
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EXPECTED MINIMUM OBLIGATIONS
Contractors expected to fulfil the
following:
1. Minimum Work and associated
Expenditure obligations for each
.
.
Bank and 50% Parent Company
Effective Date of contract.
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NON COST RECOVERABLE LICENSING
PROVISIONS
1.One of Payment of Signature Bonus
2.Annual Surface Fees-Annual
3.Training Fees- annual
4. Community Development Fees- Annual
cater for community agreed
development projects.
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OTHER LICENSING PROVISIONS
Government Participation
Contractor to carry Government
participation interests of up to 20%
during exploration phases and upon
commencement of develo ment and
production, Government may elect
either directly or through an appointed
to a fully paid up participation.
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COST AND PROFIT OIL PROVISIONS
1. Cost Recovery Cap
60% of annual production and
20% of total cost annually for five yrs
with a provision for an extension of
eriod if costs not full recovered
2. Profit Oil Splits between Governmentand Contractor
50- 50% at start of production;
, Rising to a maximum of 78% for
Government for lar e volumes of more
thane 120,000 BBl/Day
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COST AND PROFIT OIL PROVISIONS cont
3. Windfall Profit
Provided for to ensure that the
overnmen ene s rom w n a
profits when prices of crude oil willexceed the threshold crude prices
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REVIEW OF POLICY, LEGAL AND
REGULATORY REGIMES1. Both Policy and the Legal andRegulatory Frameworks are in theprocess of being reviewed to:
Align them with the 2010 KenyasConstitution
Take on board current best internationalindustry practice
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INVESTMENT OPPORTUNITIES
Emerging developments relating to oil
discovery in Kenya which is a regional
,
wide range of investment opportunitiesin:
New blocks that will be constituted from the
25% relinquishment obligations upon the
expiry of exploration periods for respectivelicensed blocks.
Establishment of local operation bases for
Seismic Processing Service Centre in the
country.
related services such as rig supply, mud
logging amongst others.25
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INVESTMENT OPPORTUNITIES Contd:
Construction of oil and gas pipeline
networks
an gas orage ac es
Crude oil Refineries and finished
roducts retail outlets
LNG Re-gasification and Liquefaction
Plants LNG transportation vessels
Local suppliers and service providers
products and services.
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CONCLUSIONS
Kenyas journey in the search for oil and gas has been
long and difficult but the Governments efforts have now
Interest by major independent oil companies inKenyas petroleum exploration portfolio is currently on
.
of data and effective evaluation of the petroleum
potential in the countrys four sedimentary basins.
column in Ngamia 1 well of Block 10BB is a good
indicator for additional discoveries in Kenyas four
basins in the near future.
Existing and upcoming investment opportunities arewide both in the upstream, midstream and down
stream sub-sectors.
Investors are encouraged to take advantage of this
earliest opportunity to invest in relevant sub-sectors27
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Nyayo House, Kenyatta AvenueP.O. Box 3058200100 Nairobi,
KENYA
Telephone: +25420
310112
Email: [email protected]
Website: www.energy.go.ke
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THANK YOU
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