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Kenya Oil Find Spurs Interest in New Blocks

Source: Reuters 4/5/2012, Location: Africa

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Kenya has seen a surge of interest for new oil blocks after striking oil last week, Martin Heya, commissioner of petroleum at the ministry of energy, said. The east African country is abuzz with news of its first oil discovery in the dry and dusty northwest town where Africa-focused UK firm Tullow Oil Plc has been exploring. The next step is to determine whether the find is commercially viable. East Africa as well as the Horn of the continent have become a hot spot for oil and gas exploration, spurred by new finds.

"I can assure you the interest is overwhelming," Heya told Reuters during a visit to a Tullow well just outside the small town of Lokicharat in a remote area surrounded by semi desert scrub land. "Big companies like Petrobras , Total , even Apache and others want those very deep water blocks ... I think it's a testimony that there is oil in Kenya." Heya said there were 46 blocks, 30 are already licensed, and 16 others are unlicensed. Of the 16, 13 have expressions of interest, he said. "There are only three which are vacant. And those ones, it's because there is no data. We are putting in place plans to acquire data. We are also acquiring data in one of the (vacant) blocks, L19," he said. Heya added that nine companies had expressed interest in the 13 other blocks.

Tullow Oil and Canada's Africa Oil Corp. each have a 50 percent working interest in Kenya's block 10BB. The well had reached a depth of 1,041 metres at the time of the discovery. Tullow, which has discovered commercial oil deposits in Uganda and Ghana, said trucking equipment to the well and finding skilled manpower was difficult in one of Kenya's poorest areas. "We are only halfway through the well. As we progress towards the target of 2,700 metres," Martin Mbogo, the general manager for Tullow in Kenya, told reporters. Tullow estimates it could spend up to $40 million on the drilling at the Ngamia 1 site. "It may be a matter of months, sometimes years, before you can actually make the determinations that you have a commercial well. However, what we have is very encouraging," Mbogo said.

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