KENYA: Africa Oil Corp and its partners plan 10 wells in the east Africa region this year with first output from Kenya expected to come in five years

Record ID: 344306

  • Title: KENYA: Africa Oil Corp and its partners plan 10 wells in the east Africa region this year with first output from Kenya expected to come in five years
  • Date: 8th April 2013
  • Summary: MARSABIT, KENYA (FILE) (REUTERS) PEOPLE AND GOATS WALKING TOWARDS LAKE TURKANA WOMEN SORTING DRY FISH SKINS YOUNG GIRL SITTING OUTSIDE HOUSE LOCAL FISHERMAN WADING THROUGH LAKE/ BOYS WASHING YOUNG BOY CARRYING FRESHLY CAUGHT FISH
  • Embargoed: 23rd April 2013 13:00
  • Keywords:
  • Location: Uganda
  • Country: Uganda
  • Topics: Business,Industry,Energy
  • Reuters ID: LVA6IGRJ7SBDWNWQ5QXM8X7N39OT
  • Story Text: Africa Oil Corp. said on Monday (April 08) that an intensive drilling campaign with its partners this year could bring it closer to confirming that Kenya has commercial quantities of oil in a region that has become a hotspot for explorers.
    Chief Executive Officer Keith Hill, whose firm has interests in blocks covering 250,000 sq km in the region, told Reuters about 468 million US dollars would be spent in 2013 to drill at least 10 wells in Kenya and other interests in east Africa.
    Africa Oil and partner Tullow Oil have discovered oil on Block 10BB and Block 13T in Kenya but still needs to confirm commercial levels.

    "We don't always have this type of luck early on, I think that is what has got us encouraged is that, like the North Sea it was the 58th well they drilled before they made their first commercial discovery. We think probably in five to 10 wells we will have a commercial discovery," said Hill.

    "Interim there is a lot to be done, as I said we are spending 468 million dollars this year so there is a lot of opportunities for local contractors to build themselves up and build capacity and be the ones that are doing this work. There is also a lot of employment opportunities. We are working with the universities here to try to get some programs in place to train up things like geologists, geophysicists, petroleum engineers and our goal is basically to get rid of expensive expats and replace them with locals who are much better employees and have a much better vested interest in the projects succeeding," he added.
    Once seen as a remote and resource hungry part of Kenya, the arid north now boasts potential wealth that could make it one of the richest regions in the country.
    But excitement about the discovery of oil has been tempered by fears that bad management of the resource could send Kenya the way of other oil producing countries where the riches have encouraged greed, violence and corruption.
    Activists say communities should not only expect better development as a result of the oil but also shares in the profits so they can financially benefit as much as the government and oil companies.
    Hill says companies will be working closely with communities to make sure that they are not left out of the process and that their interests are taken as a first priority but warned that expectations should be realistic.

    "When we go into a place, the first thing we do is go engage with the local communities. We call it our social license to operate. We need to go in and establish relationships with the local communities, we need to get their expectations set right. Most people when we discovered oil, though we would be producing oil in a matter of weeks or months, and its going to be a long process its probably going to be somewhere around five years for first oil," he said.
    Asked whether Africa Oil would consider any acquisition approaches for his firm from bigger players eyeing the region, Hill said Africa Oil was still in a phase where it wanted to determine the full scope of the prospects on its acreage.

    "I don't see us doing any new ventures with Africa Oil, I think we have looked at every block in Kenya, Ethiopia and Somalia and I think we've got what we think are the best blocks and I think we are happy where we are," he said.
    Oil discoveries in Uganda and natural gas finds in Tanzania and Mozambique have drawn in explorers to what experts call one of the world's last untapped hydrocarbon frontiers.
    But starting production from Tullow's Uganda finds has been slowed by talks with the government about how to use the oil.
    Hill said the authorities in Kenya and Ethiopia, where Africa Oil has interests in four blocks, had assured him that terms would remain attractive for explorers and governments.
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