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Friday, May 26, 2017

More Turkana oil find boosts pipeline plans

An aerial view of Ngamia-1 oil rig in Turkana on April 5 ,2012 /FILE
An aerial view of Ngamia-1 oil rig in Turkana on April 5 ,2012 /FILE

Plans to build Kenya’s crude oil pipeline from Turkana oilfields to Lamu have gotten a major boost after British explorer Tullow discovered more oil.

Tullow said yesterday it encountered 75 metres of net oil pay in two zones at Emekuya-1 well in Block 13T.

“The Emekuya-1 exploratory appraisal well has made an important discovery in the northern part of the South Lokichar Basin,” Tullow Exploration Director Angus McCoss said in a statement. “This well has proven oil charge across a significant part of the Greater Etom structure and we are very encouraged by the quality and particularly the regional extent of the reservoir.”

Early January, the firm discovered the Erut-1 exploration well with a gross oil interval of 55m with 25m of net oil pay in the same block. The new find brings Kenya’s estimated oil reserves closer to a billion barrels from the current 750 million barrels.

Tullow said last month in a trading update that Environmental and Social Impact Assessment and Front-End Engineering Design for the proposed 891-kilometre pipeline are expected to start between July and December.

“The Kenya Joint Venture and the Government of Kenya continue to progress the export pipeline commercial and finance studies and preparations are under way for the ESIA and FEED which are also planned for the second half of 2017,” the company said.

Tullow holds 50 per cent stake in the joint venture which owns the oil-rich blocks 10BB and 13T, while Canadian African Oil Corporation and business conglomerate Maersk of Denmark hold a 25 per cent stake each.

Engineering studies and contracting activities are underway ahead of identifying companies to conduct ESIA and FEED, the London Stock Exchange’s listed Tullow said.

Ecobank global head of research Edward George said on May 11 that investment decision in the proposed pipeline will be determined by the size of reserves, net present value of the reserves, the cost of building pipelines and field development costs.

“Tullow and its partners have various options in Kenya,” Goerge said. “They could rediscover more reserves and monetise these for other companies via the pipeline, link pipeline to South Sudan and Ethiopia or re-establish pipeline link with Uganda.”

Tullow, African Oil Corporation and Maersk sealed a deal with Ministry of Energy and Petroleum for the Early Oil Pilot Scheme on March 14.

The planned export of the Turkana crude oil, which has less sulphur but is waxy, on pilot basis is expected to provide information to help in planning for full field development.


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