Kenya loses out on oil and gas riches

June 21:

Kenya is losing out on millions of dollars in investments as areas designated for prospecting for oil and gas remain unexplored.

The vacant lots are offshore L25, L26, L15, L8 and onshore 10A.

Oil and gas prospecting rights for these areas cannot be awarded until a new regulatory framework has been finalised. Edgo Energy, Ophir Energy Plc, Apache Corporation and Tullow Oil Plc in 2013 surrendered block L26, L15, L8 and 10A, respectively.

Kenya’s Ministry of Energy said crude oil and natural gas prospecting rights will be awarded to firms interested in undertaking exploration after the Petroleum Bill is debated by parliament and new legislation is enacted.

Collapsed talks

Negotiations between the ministry and Statoil for deep offshore area L25 collapsed in 2012. Kenya wanted at least $11.7 million spent in three years on various activities, but the Norwegian firm asked for a downward review of the terms.

Statoil would have paid $300,000 as a one-off payment as signature bonus, surface fees of $5 per square kilometre, training fees of $175,000, and spent $50,000 on community development projects.

Oil and Energy Services Ltd said Kenya will benefit if competitive licensing is implemented.

“Proposed licensing rounds will give the true value of acreage as Kenya will select the company that submits the highest bid and offers the best deal,” said the consulting firm’s chief executive, Mwendia Nyagah.

Source: http://www.theeastafrican.co.ke/business/Kenya-loses-out-on-oil-and-gas-riches-/-/2560/2357030/-/j2wln5z/-/index.html?