UK exploration firm Tullow strikes oil in Kenya | WPN World People News

President Kibaki Monday announced that the UK petroleum explorer Tullow, which had unlocked billions of barrels of oil in neighbouring Uganda, had made a "major breakthrough" with the discovery of oil in Turkana county, located in the country's arid north-western region.

Making the announcement at a public function in Nairobi, the president said the discovery had been made by Tullow at the weekend but the commercial viability of the oil find remained uncertain.

"This is the first time Kenya has made such a discovery and it is very good news for our country," Kibaki said. "It is, however, the beginning of a long journey to making our country an oil producer, which typically takes in excess of three years."

Tullow said in a statement released immediately after President Kibaki made the announcement that the oil discovered in northern Kenya "has similar properties to the light waxy crude it discovered in Uganda six years ago."

Apart from raising Tullow's profile as a steady oil hunter with a proven track record in finding oil in Africa, the discovery has significantly lowered the risk profile of oil exploration in Kenya setting the stage for new investments, feel energy experts.

"This oil find risk has technically lowered Kenya's exploration risk. We are likely to see companies spending more here because indications are that their investment will not go to waste," Mwendia Nyagah, a consultant on petroleum issues said.

The discovery of oil in Turkana is also likely to trigger major a shake-up of firms holding exploration licences for speculative purposes as more newcomers line up for a piece of the action.

Share price of Tullow Oil, a public listed company at the London Stock Exchange, climbed 2.5 per cent to 15.07 pounds after it announced that its drilling campaign in Kenya and Ethopia had discovered light crude oil.

Tullow said it had found 20 meters of oil (referring to the depth of the oil reservoir) in the Ngamia-1 exploration well it co-owns with Canadian partner Africa Oil Corp.

The well, in Block 10BB of the Turkana County, had been drilled to about a third of its target depth of 2,700 metres raising the prospect of it being the largest oil find in the region.

The UK firm is aiming for at least 300 million barrels of oil with its first two sites in an underdeveloped area that runs across the Kenyan border into Ethiopia.

George Cazenove, the Tullow spokesman, sought to temper the excitement of the oil discovery with a warning that it had only put Kenya at the beginning of a long process to becoming an oil producer.

He cited the example of neighbouring Uganda where oil was first discovered in 2006 and has not yet reached the production stage.

Kenya's effort to find oil has been a very long journey. At least 32 exploratory wells have been drilled since independence in 1963 in the quest to find oil and gas.

Tullow and its partner, Africa Oil, have been drilling the Ngamia-1 well on block 10BB in the Lokichar basin since last year.

At the effort now moves to establish the commercial viability of the oil discovery, the exploration firms said the Ngamia structure is the first prospect to be tested as part of a multi-well drilling campaign in Kenya and Ethiopia.

"Many leads and prospects similar to Ngamia have been identified and following this discovery the outlook for further success has been significantly improved," Africa Oil said.

The discovery of oil deposits in Turkana is expected to propel the Kenya's profile as a potential oil and gas producer and draw huge inflows of foreign investments, joining Uganda and Tanzania that have already established commercial deposits of oil and natural gas respectively.

Tullow has confirmed 1.1 billion barrels of oil in Uganda and believes there are 1.4 billion left to find. Uganda plans to begin processing its oil for export next year.

Source: The Africa News.Net