The Upstream Sector in Kenya

The Upstream sector in Kenya essentially deals with hydrocarbon (Oil and Gas) exploration, both onshore and offshore within the four sedimentary basins in Kenya (Anza, Lamu, Mandera and Tertiary Rift), with a total area of about 490,000 square kilometres. The Upstream Division also deals with licensing of International Oil Companies (IOC’s), monitoring of exploration activities, development and production, transportation and export of crude products.

History of Petroleum Exploration in Kenya

Petroleum Exploration in Kenya dates back to the early 1950s when the first Oil Exploration License (OEL 1) was granted to BP Shell Development Company to operate in the Lamu Embayment. To date, fifty six (56) exploration wells have been drilled by various oil exploration companies within the four sedimentary basins, giving a well density of approximately one well for every 12,500 km2. However, this needs to be increased in order to discover hydrocarbons since some of the world’s known economical reserve pools occupy as little as 50 to 150km2. Despite this, the probability for discovering oil in the country is higher because current data acquisition and interpretation techniques are much more advanced today than before. Emphasis is also being placed on acquiring in-fill data in sparsely mapped areas and zones with known poor data quality.

rig

A Drilling Rig

Petroleum exploration activities have never been as vibrant (upbeat, during the last 13 years) in Kenya as they are at present. A total of nineteen (19) companies are involved and they occupy thirty five (35) out of sixty three (63) exploration blocks, representing 56%, of the blocks where the same number of Production Sharing Contracts (PSC’s) has been granted.

The involved companies are:-

  • Afren/EAX – Block 1;
  • Africa Oil Corporation – Block 9
  • CEPSA – Block 11A,
  • Simba Petroleum – Block 2A
  • Lion Petroleum – Block2B
  • A-Z Petroleum – Block L1A, L3
  • Camac Energy – Block L1B
  • BG Group – Blocks L10A, L10B
  • Anadarko – Blocks L11A, L11B, L12
  • Total – Block L22
  • NOCK (National Oil Corporation (K)) Blocks 14T and L19A?
  • Tullow Oil BV – Blocks 10BAA, 10BB,12A,13T, 12B
  • ENI – Blocks L21, L23, L24
  • Rift Energy – Blocks L19
  • Millo – Block L20
  • Imara Energy – Block L2
  • Zara Oil & Gas – Blocks L4, L13
  • Far Energy Block -L6 and,
  • Lamu Oil & Gas – Block L14.

Update on Well Drilling Results

To date, a total of fifty six (56) wells have so far been drilled in the country. Twenty (20) of these wells are located in Lamu Basin; Fifteen (15) in Anza Basin; Four (4) in Mandera while fifteen (15) are in the Tertiary Rift Basin.

Out of the 56 wells drilled, thirty (30) had hydrocarbon shows, with more than seventeen (17) known oil seeps spreading throughout the four basins. This confirms that all the four Kenyan sedimentary basins possess mature hydrocarbon regimes capable of accumulating economical reserves, where subsurface source rocks, reservoirs and traps do occur in the right combination.

The table below summarizes hydrocarbon shows in all wells drilled in the four basins:-

Basin No. of Drilled Wells Oil & Gas Oil only Gas only No show Oil Seeps
Anza 15 2 1 1 4 >8
Lamu 20 10 6 6 2
Mandera 4 2 1 1 2 2
Tertiary Rift 15 14 8 6 2 2
Total 56 28 16 14 10 >14

 

Current Oil Exploration Activities

Current oil exploration activities in Kenya include rig mobilisation by Tullow Oil to commence onshore drilling in Block 10BB, offshore deep 3D-seismic data acquisition by Anadarko in its five blocks, seismic vessel mobilisation activity by BG Group to commence both 2D and 3D seismic data acquisition in blocks L10A and L10B and the planned drilling in Block L8 by Apache Company scheduled to commence later in the year_____

2d-seismic

2D Seismic Data Acquisition Anza Basin (a)

seismic-data-recording

Seismic Data Recording in Anza Basin (b)

In addition, Vanoil has completed shooting its 2D seismic data in Blocks 3A and 3B and is planning the acquisition of 3D seismic in the same blocks. Geophysical gravity data acquisition in Blocks 14T and L19A by NOCK and the State Department of Petroleum Staff respectively, is in progress. In addition, negotiations are ongoing for the four applied Blocks (L1A, L2, L3 and L12B) three of which are situated onshore Lamu Basin and one (12B) is in the Nyanza Trough of the Tertiary Rift.

gravity-data

Gravity Data Acquisition in Block 19A

The surface geological and geophysical mapping that is ongoing in Block L19A is aimed at enriching the scanty available data in order to boost its attractiveness to potential investors. Similarly, the rapid interest shown by International Oil Companies (IOC’s) in East Africa in general and Kenya in particular is reflected by a surge in the number of farm-ins and take-overs of the already signed PSCs that were formerly held by small and often not very known petroleum companies worldwide by major oil players in the market.

magneto-telluric

Magneto Telluric Data Acquisition Equipment

The entry of big multinational oil companies promises further increased exploration activities in the region formerly regarded as “an oil frontier.” Their presence has ignited high interest in major service companies which are strategising to take up the existing opportunities.

As an example, the BGP and Great Wall Company of China have set up local offices for the same purpose while Schlumberger Company is negotiating with the University of Nairobi with an intention of setting up local training and operations office, in addition to the one in Uganda. The aim is to set up equipments capable of acquiring, processing and interpreting geophysical data to serve the entire Eastern African Region.

Challenges facing Petroleum Exploration in Kenya

Petroleum exploration activities are capital-intensive with 100% investment risk being undertaken solely by the oil companies. Challenges in the sector include attraction of capital; high cost of acquisition of new technology and technical capacity; limited manpower and technological capacity.

Others are land access and permit wherever exploration blocks fall on private land or cultural heritage areas; frequent project implementation delays caused by NGOs and civil Societies agitating for Human Rights; environmental issues and compensation; limited primary technical data in most of the country’s exploration blocks; and the inherent weakness in the Petroleum Act and Model PSC (currently under review).