Oil has been discovered in Turkana North District by British company Tullow Oil in the first well it has drilled in Kenya. The Tullow share price jumped by £97 to £1,570 (Sh201,000) per share yesterday, up 7 per cent, after the news was released. The oil deposits were found in Ngamia-1 exploration well block 10BB, located in a remote area off the road to Lokichar shopping centre.
According to Tullow Oil, the deposits have similar properties to the light waxy crude that it discovered in Uganda two years ago. "We are are yet to confirm whether the deposits are of commercial quantities because we are just in the initial stages of drilling at 1,041 metres deep. The well will now be drilled to a depth of approximately 2,700 metres before we confirm within the next few months," said Tim O'Hanlon, Tullow Oil vice president for Africa yesterday.He was addressing a press conference at the Energy ministry.
O'Hanlon said Tullow had identified ten more similar prospects in the Rift Valley basin. He said they struck oil in a record two months despite the difficult terrain. "This is an excellent start to our major exploration campaign in the East African rift basins of Kenya. To make a good oil discovery in our first well is beyond our expectations and bodes well for the material programme ahead of us," he said.
Turkana county is one of seven basins mapped in Tullow’s 100,000 square kilometre exploration area in Kenya and Ethiopia. Tullow found oil with an estimated extractable potential of 2 billion barrels in its 9,000 square kilometre exploration area in the Lake Albert Rift basin in Uganda. “I wish to make an important announcement to the nation. This morning, I have been informed by the Minister for Energy that our country has made a major breakthrough in oil exploration,” President Kibaki told the nation yesterday.
Oil exploration in Kenya started the1930s without discoveries of commercial reserves. Kibaki pointed out that it typically takes three years for a viable oil deposits to translate into a country becoming an oil producer. Energy minister Kiraitu Murungi said this positions Kenyan as a potential oil and gas exporter. The seismic data indicates there may be several oil fields in the basin and huge quantities of oil.
He said the the Energy act will be reviewed to accommodate the provisions for resource sharing in the new constitution. He said there will be a revenue sharing agreement that will first benefit the host community, then the national government and then Tullow and other multinationals. "In most of the workshops we attend, they have themes asking whether oil is a blessing or curse, but this is a major blessing to the people of Turkana and Kenya. It would be a shame if Turkana, a major poverty zone does not benefit from oil as the host community," Murungi said.
Tullow has been allocated seven inland and one offshore blocks out of the 38 distributed among licensees. Tullow operates block 10A where they struck oil, 10BA 10BB block 13T as well as 12A and 12B in North and Western Kenya. Last year Chinese company CNOOC raised hopes after finding gas in Isiolo but it later proved to be insignificant. Several companies have drilled in the past but there was a lull in the 1980s and 1990s until the new blocks were allocated.
Oil exploration activities are mainly in Northern Kenya. There is an ongoing oil drilling at Bubisa in Marsabit North district. There are also thought to be substantial offshore gas deposits running all the way from Mozambique to Somalia. International companies are particularly interested in the Lamu sector. Tanzania and Mozambique are already exporting their gas deposits.