KENYA: Oil exploration resumes off Africa's east coast for the first time in 35 years

Record ID: 343367

  • Title: KENYA: Oil exploration resumes off Africa's east coast for the first time in 35 years
  • Date: 2nd January 2007
  • Summary: (AD1) MOMBASA, KENYA (RECENT) (POOL) VARIOUS OF OIL DRILLING EQUIPMENT AT STORAGE FACILITY
  • Embargoed: 17th January 2007 12:00
  • Keywords:
  • Location: Kenya
  • Country: Kenya
  • Topics: Industry
  • Reuters ID: LVA5HL9KOHA0RNIOUBLRCK0S4KU8
  • Story Text: Eighty kilometres off the coast of northern Kenya, engineers aboard oil exploration ship Chikyu are busy testing the sea bed for oil.
    The sea bed at Pomboo, east of Kenya's Lamu Island, is more than two kilometres below the surface and the ship has been drilling down to as far as 2900 meters. Chances of finding a commercially viable oil deposit are slim, at 12 percent.
    Yet Woodside Oil is pumping more than 100 million US dollars into deepwater oil exploration in the region, the first extensive exploration in more than thirty years.
    With sky-high oil prices, a 12 percent chance of striking oil is actually quite a high percentage in the oil exploration industry, according to John Swingler, who said the company was extremely optimistic about its chances.
    "Well we as Woodside are very excited about the prospects of finding oil here and I'm sure the Kenyan people also will be and we are very positive about our findings and we hope very much to find oil. And I can't quite explain why there's been no drilling here previously for the past thirty years but we certainly are very positive that on this occasion we will find something. We're very hopeful," he said aboard the Chikyu.
    Modern technology and higher oil prices have meant that companies like Woodside are re-evaluating the prospects for deepwater oil exploration and more and more unexplored African sites are showing promise.
    Yet most are in north and west Africa, and waters off east Africa have remained largely unexplored ever since 1971, when Shell and BP ended explorations after digging 11 wells in the region.
    Three other companies: Origin, Gippsland Petroleum and the China National Offshore Oil Corporation, are also prospecting in the area.
    Appraisal and development of an oil discovery to the point production of oil can takes five to seven years.
    Woodside has a 30 per cent interest in two blocks, blocks 5 and 7, off the Kenyan coast, though it is working on a joint venture with three other companies - Dana Petroleum, that is controlling 30 per cent, Repsol-YPF (20 per cent) and Global Petroleum (20 per cent).
    The exploration has not been without its critics, however. Local journalists in Kenya have raised issues ranging from locals not benefiting from employment opportunities, to the dangers posed by oil drilling to fragile coral reefs.
    But with no oil discovered yet, it is still early days. And Woodside has also been careful not to raise expectations among Kenyans. "In this current drilling campaign, if we find any hydrocarbons, we need to spend a bit of time evaluating how much hydrocarbons are there and whether this could be a commercial discovery or not. And that will take time. It will not be immediately available post this drilling campaign," explained Woodside General Manager Alex Taylor, on a recent press tour of Woodside operations.
    Slim chance or not, oil-dependent and mineral-poor Kenya is extremely hopeful of a find, according to an official from the country's national oil company. "The prospects are twelve percent but obviously what they mean for Kenya would be a fantastic shift (sea) change for us. As you know, we are buying petroleum products for driving our economy. And any modern consumer economy requires petroleum," explained Mary M'Mukindia, Managing Director of Kenya's National Oil Corporation.
    Drilling that started in early December 2006 is expected to continue in January 2007, with early results expected by April 2007.
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