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BY HON KIRAITU MURUNGI, EGH, MP MINISTER FOR ENERGY REPUBLIC OF KENYA JULY 2012
CONTENTS
GENERAL ASPECTS ABOUT KENYA SEDIMENTARY BASINS BLOCKS BY BASIN STATUS OF OIL EXPLORATION ACTIVITIES LECENSING OF PETROLEUM EXPLORATION BLOCKS EXPECTED MINIMUM CONTRACTOR OBLIGATIONS LICENSING PROVISIONS COST AND PROFIT OIL PROVISIONS REVIEW OF POLICY AND LAW INVESTMENT OPPORTUNITIES CONCLUSIONS
8/3/2012
SEDIMENTARY BASINS
Kenya has four(4) sedimentary basins with good potential t ti l f for di discovery of fh hydrocarbons. d b Th The basins are: Lamu, Mandera, Anza and Tertiary Rift. Combined basin area of about 485,000km 485 000km2 Lamu Basin: Has both Onshore and offshore exploration sub-basins. Geology is similar to the coastal basins of Tanzania and Mozambique q where commercial gas deposits have so far been discovered. Sediment thickness of about 13,000m
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BLOCKS BY BASIN
Basins currently sub-divided into 46 Exploration blocks and 45 licensed. The blocks are divided B t Between basins b i as f follows: ll (1) Lamu Basin- 31 blocks: -18 18 offshore -7 onshore and -6 both offshore and onshore (2) Mandera Basin- 3 blocks all onshore (3) ( ) Anza Basin4 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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Tullow Oil Operates 6 Blocks 10A Anza Basin, 10BB 10BA, 10BB, 10BA 12A, 12A 12B and 13T in Tertiary Rift Basin Company has drilled one crude oil discovery well Ngamia 1 in Block 10BB out of the 10 prospects t i in Bl Blocks k 10BB and d 13T 13T. Well drilled up 2340m and a Net Oil Pay column of more than 100m has been confirmed Company has mobilized the same rig to drill Twiga 1 exporatory well in Block 13T in August 2012. Drilling of more wells to be done to ascertain the commerciality of the discovered oil deposits A seperate rig has been mobilized to drill an exploratory well in Block 10A Anza Basin in September, 2012.
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5. Other Companies p
After being licensed in May 2011, has already completed acquisition, processing and interpretation of about 1500 line km of 2D seismic data and another 2500km2 3D seismic data. 10 companies at various stages of seismic data acquisition and interpretation. 10 companies recently licensed between
10th May M and d 29th July, J l 2012 2012, t to commence operations on or before respective Effective Dates.
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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. All contracts are based on Model Production Sharing Contract (PSC) g of blocks is conducted on Licensing basis of an open door policy and analysis of Financial and Technical capabilities. capabilities Due encouraging results it is intended to introduce Licensing/ bidding rounds.
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EXPECTED MINIMUM OBLIGATIONS Contractors expected to fulfil the following: 1. Minimum Work and associated Expenditure obligations for each exploration period. period 2. These are secured through 50% 2 Bank and 50% Parent Company Guarantees on or before the Effective Date of contract.
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Government Participation
Contractor to carry Government participation interests of up to 20% during exploration phases and upon commencement of development p and production, Government may elect either directly or through an appointed Agent to convert the carried interest to a fully paid up participation.
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COST AND PROFIT OIL PROVISIONS cont 3. Windfall Profit Provided for to ensure that the G Government t benefits b fit f from windfall i df ll profits when prices of crude oil will exceed the threshold crude prices
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1. Both Policy and the Legal and Regulatory Frameworks are in the process of being reviewed to: Align them with the 2010 Kenyas Constitution Take on board current best international industry practice
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INVESTMENT OPPORTUNITIES
Emerging developments relating to oil discovery in Kenya which is a regional Socio-economic Hub Hub, points towards a wide range of investment opportunities in:
New blocks that will be constituted from the 25% relinquishment obligations upon the expiry p y of exploration p periods p for respective p licensed blocks. Establishment of local operation bases for Seismic Acquisition Service Companies and Seismic Processing Service Centre in the country. Establishment of local bases for drilling related services such as rig supply, mud 25 others. logging amongst
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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 started to bear fruit for instance: Interest by major independent oil companies in Kenyas petroleum exploration portfolio is currently on an upward trend. This has added value to the quality of data and effective evaluation of the petroleum potential in the countrys four sedimentary basins. The discovery of more than 104m of net oil pay 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 are wide both in the upstream, midstream and down stream sub-sectors. Investors are encouraged to take advantage of this earliest opportunity to invest 27 in relevant sub-sectors
CONTACT
Ministry of Energy Nyayo House, Kenyatta Avenue P.O. Box 3058200100 Nairobi, KENYA Telephone: +25420310112 Email: ps@energymin.go.ke Website: www.energy.go.ke
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THANK YOU
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