kis2012 oil gas exploration minister for energy

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OIL AND GAS EXPLORATION AND INVESTMENT

OPPORTUNITIES IN KENYA

BY

HON KIRAITU MURUNGI, EGH, MP

MINISTER FOR ENERGY

REPUBLIC OF KENYA


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CONTENTS GENERAL ASPECTS ABOUT KENYA

SEDIMENTARY BASINS

STATUS OF OIL EXPLORATION ACTIVITIES LECENSING OF PETROLEUM EXPLORATION

EXPECTED MINIMUM CONTRACTOR

OBLIGATIONS

COST AND PROFIT OIL PROVISIONS

REVIEW OF POLICY AND LAW

CONCLUSIONS

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Lies on the Eastern part ofr ca, as r e e qua or.

Area: 582,646 sq.km

Population approximately 40m on

Coastline: About 550 km long

Deep water Harbour in

Beautiful Coastal White SandBeaches

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SEDIMENTARY BASINS

Kenya has four(4) sedimentary basins with good

po en a or scovery o y rocar ons. e

basins are: Lamu, Mandera, Anza and Tertiary Rift.

,

Lamu Basin:

sub-basins.

Geology is similar to the coastal

basins of Tanzania and Mozambi ue where

commercial gas deposits have so far beendiscovered.

Sediment thickness of about 13,000m

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SEDIMENTARY BASINS CONT:

Anza Basin:

ns ore as n w c s a con nua on o e

Central African Rift System into Kenya fromSouth Sudan where commercial oil reservesare proven and production is on stream.

Sediment thickness of about 10,000m

Mandera ns ore as n w ose geo ogy ex en s n o e

Luug-Mandera Basin of Somalia and OgdenBasin of Ethiopia.

Sediment thickness of about 10 000m

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SEDIMENTARY BASINS CONT:

Tertiary Rift Basin

Essentially onshore basin which in partextends into two major Lakes namely;Lake Turkana in the North and Lake

c or a n e es ern arm o e r .

Youngest of the four basins whose

geology similar to Ugandas Albertine

Sediment thickness of about 4000m

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SEDIMENTARY BASINS MAP

Lamu Basin 261,000km2

Mandera Basin 43,000km2

Anza Basin 81,000km2

Tertiary Rift Basin 100,000km2T

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BLOCKS BY BASINBasins currently sub-divided into 46 Exploration

blocks and 45 licensed. The blocks are divided

e ween as ns as o ows:

(1) Lamu Basin- 31 blocks:

-

-7 onshore and

-6 both offshore and onshore

(2) Mandera Basin- 3 blocks all onshore

3 Anza Basin- 4 blocks all onshore

(4) Tertiary Rift Basin- 8 blocks with 10BA, 10BB

partly into Lake Turkana and

12Bpartly into Lake Victoria

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STATUS OF EXPLORATION ACTIVITIES

44 Blocks are licensed to 23

International Oil Companies (IOCs) andone to NOCK.

as follows:

, ,L11A, L11B and L12, Lamu Basin

Company has finalized plans to mobilize

blocks L7 and L12 by January, 2013.

2. Apache- One offshore Block L8:

exploratory well in Mbawa Prospect inAugust 2012. 9


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EXPL RATI N ACTIVITY STAT S C nt :

3. Tullow Oil Operates 6 Blocks 10A Anza Basin,, , ,

Basin Company has drilled one crude oil discovery

well Ngamia 1 in Block 10BB out of the 10prospec s n oc s an .

Well drilled up 2340m and a Net Oil Pay column

of more than 100m has been confirmed

Twiga 1 exporatory well in Block 13T in August2012.

Drilling of more wells to be done to ascertain the

A seperate rig has been mobilized to drill anexploratory well in Block 10A Anza Basin inSeptember, 2012.

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EXPL RATI N ACTIVITY STAT S C nt :

4. BG Grou - O erates 2 dee offshoreBlocks L10A and L10B.

After being licensed in May 2011, has alreadycompleted acquisition, processing and

seismic data and another 2500km2 3D seismicdata.

5. Other Com anies 10 companies at various stages of seismic

data acquisition and interpretation.

10 companies recently licensed between

ay an u y, , ocommence operations on or beforerespective Effective Dates.

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CURRENT LICENSED BLOCKS

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LICENSING OF BLOCKS

Licensing of petroleum exploration

Blocks is governed by the Petroleum

Exploration and Production Act Chapter

308 of the Laws of Kenya.

Production Sharing Contract (PSC)

Licensin of blocks is conducted onbasis of an open door policy and

analysis of Financial and Technical

. Due encouraging results it is intended

to introduce Licensing/ bidding

rounds.

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LICENSING OF BLOCKS Contd:

The three exploration periods

are:

(i) Initial Exploration Period:

up to two (2) Years for onshore

three (3) years for deep offshore

blocks(ii) First Additional Exploration Period

of two (2) years

period of two (2)years

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EXPECTED MINIMUM OBLIGATIONS

Contractors expected to fulfil the

following:

1. Minimum Work and associated

Expenditure obligations for each

.

.

Bank and 50% Parent Company

Effective Date of contract.

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NON COST RECOVERABLE LICENSING

PROVISIONS

1.One of Payment of Signature Bonus

2.Annual Surface Fees-Annual

3.Training Fees- annual

4. Community Development Fees- Annual

cater for community agreed

development projects.

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OTHER LICENSING PROVISIONS

Government Participation

Contractor to carry Government

participation interests of up to 20%

during exploration phases and upon

commencement of develo ment and

production, Government may elect

either directly or through an appointed

to a fully paid up participation.

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COST AND PROFIT OIL PROVISIONS

1. Cost Recovery Cap

60% of annual production and

20% of total cost annually for five yrs

with a provision for an extension of

eriod if costs not full recovered

2. Profit Oil Splits between Governmentand Contractor

50- 50% at start of production;

, Rising to a maximum of 78% for

Government for lar e volumes of more

thane 120,000 BBl/Day

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COST AND PROFIT OIL PROVISIONS cont

3. Windfall Profit

Provided for to ensure that the

overnmen ene s rom w n a

profits when prices of crude oil willexceed the threshold crude prices

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REVIEW OF POLICY, LEGAL AND

REGULATORY REGIMES1. Both Policy and the Legal andRegulatory Frameworks are in theprocess of being reviewed to:

Align them with the 2010 KenyasConstitution

Take on board current best internationalindustry practice

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INVESTMENT OPPORTUNITIES

Emerging developments relating to oil

discovery in Kenya which is a regional

,

wide range of investment opportunitiesin:

New blocks that will be constituted from the

25% relinquishment obligations upon the

expiry of exploration periods for respectivelicensed blocks.

Establishment of local operation bases for

Seismic Processing Service Centre in the

country.

related services such as rig supply, mud

logging amongst others.25


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INVESTMENT OPPORTUNITIES Contd:

Construction of oil and gas pipeline

networks

an gas orage ac es

Crude oil Refineries and finished

roducts retail outlets

LNG Re-gasification and Liquefaction

Plants LNG transportation vessels

Local suppliers and service providers

products and services.

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CONCLUSIONS

Kenyas journey in the search for oil and gas has been

long and difficult but the Governments efforts have now

Interest by major independent oil companies inKenyas petroleum exploration portfolio is currently on

.

of data and effective evaluation of the petroleum

potential in the countrys four sedimentary basins.

column in Ngamia 1 well of Block 10BB is a good

indicator for additional discoveries in Kenyas four

basins in the near future.

Existing and upcoming investment opportunities arewide both in the upstream, midstream and down

stream sub-sectors.

Investors are encouraged to take advantage of this

earliest opportunity to invest in relevant sub-sectors27


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Nyayo House, Kenyatta AvenueP.O. Box 3058200100 Nairobi,

KENYA

Telephone: +25420

310112

Email: [email protected]

Website: www.energy.go.ke

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THANK YOU

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kis2012 oil gas exploration minister for energy

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