HomeEast AfricaKenya's first offshore gas strike not economic

Kenya’s first offshore gas strike not economic

A Tullow and Heritage
Oil rig is readied for
production in Uganda’s
Lake Albert
Nairobi, Kenya — 12 September 2012 – Kenya’s first offshore gas discovery is encouraging but not large enough for commercial production, according to the east African country’s energy minister.

Reuters reports that British exploration firm Tullow Oil and Australia’s Pan-continental Oil & Gas announced on Monday that their licence consortium’s operator Apache Corporation had found gas in the shallow target of offshore well Mbawa-1.

But yesterday Tullow dashed hopes that oil might be found at the lower depths of the well, saying that no oil or gas had been found there and that the well would now be plugged and abandoned.

“The total amount of gas found is not sufficient in isolation to be commercial. We are, however, encouraged that a reservoir containing hydrocarbons has been found,” Kenya’s energy minister Kiraitu Murungi told a news conference here.

U.S. firm Apache, which has a 50% stake in the L8 licence block where Mbawa-1 is located, said the well would have needed to contain at least around 3 trillion cubic feet (85 billion cubic metres) of natural gas to make it worthwhile to install the infrastructure needed to produce, liquefy and distribute it.

Even so, Apache Kenya managing director Tim Gilblom said the find would encourage other companies holding licences in Kenya’s other offshore blocks, including Anadarko and Britain’s BG Group.

Recent discoveries offshore Tanzania and Mozambique have already given rise to hopes that East Africa will become a major new supplier of gas to energy-hungry Asia, and Tanzania now estimates it has 28.74 trillion cubic feet of recoverable gas reserves.

Earlier this year Tullow also announced Kenya’s first onshore oil strike.

Source: Reuters Africa. For more information, click here.