Oil explorers have made the first major discovery of gas offshore Kenya, they said recently, underlining the potential of East Africa to be one of the next great producing regions.
But no oil has yet been found.
A series of recent discoveries offshore Tanzania and Mozambique has cemented the future of East Africa as a major new supplier of gas to energy-hungry Asia.
For now, attention has turned to the potential for deepwater oil deposits, which would be easier to exploit.
The Mbawa-one well, drilling around 70 kms off the coast of Malindi, found about 52 metres of gas in its shallowest target, said the stake holders.
Britain’s Tullow Oil and Australia’s Pancontinental Oil & Gas, which have a 15 per cent interest each in the licence consortium, are the discoverers of this find.
Drilling operator Apache Corp holds a 50 per cent interest and Origin Energy the remaining 20 per cent.
“With drilling continuing to a deeper exploration target, these interim results may be the first part of the story in this well.
“They are certainly just the beginning of the main story of oil and gas exploration offshore Kenya,” said Pancontinental’s chief executive Barry Rushworth on Monday.
Advances in deep-water drilling and problems in securing access to regions such as the Middle East have encouraged industry interest in the previously little-explored East African area in recent years.
Last month, the U.S. Geological survey estimated that over 250 trillion cubic feet (7.1 trillion cubic metres) of natural gas may lie off Kenya, Tanzania and Mozambique.
These are compared with 186 trillion cubic feet for Nigeria, Africa’s biggest energy producer.
“A substantive gas discovery in the shallower sections (of Mbawa-1) is supportive of the scale of the region’s hydrocarbon generative potential.
“We think de-risks the nearby and deeper prospects as well,” said analysts at Morgan Stanley.
They cautioned, however, that with huge gas discoveries already in place in Mozambique and Tanzania, the value of the Kenya find may be relatively low.
The situation may be different if the find is very substantial or oil is found at the lower depths.
Tullow said the well has so far reached a depth of 2,553 metres with drilling set to continue to a total depth of 3,275 metres in the quest for oil.
The discovery received a lukewarm reception from Kenyan energy officials, who had hoped the country’s first offshore well in half a decade would encounter oil.
Natural gas is far more expensive to produce and bring to market than oil, and Kenya currently has no infrastructure in place to store or ship the resource.
Additionally, all the east African country’s petroleum rules are set up to regulate oil production. Natural gas laws must now be made from scratch.
“If you’re measuring on a scale of 1 to 100, finding oil would have been 100, finding gas is 70-80,” said Mwendia Nyaga, a Nairobi oil and gas consultant .
He was former head of state-owned National Oil Corporation of Kenya.
Buhari Thumbs Up For NLNG As NNPC Reviews Activities
The Nigerian National Petroleum Corporation (NNPC) held its head high as it commenced activities for the week following commendation from President Muhammadu Buhari for rallying shareholders to make Nigeria Liquefied Natural Gas Limited (NLNG) a company to reckon with.
Buhari who is also the Minister of Petroleum Resources gave the commendation at the ground breaking of the NLNG Train 7, recently.
He said that the NLNG had always been associated with success and had become a global company.
“The NLNG Train 7 represents another historic milestone in the history of NLNG. NLNG story has been associated with success,” he said.
The president also said that the NLNG had contributed 114billion dollars in taxes to Nigeria, and tthat with NLNG Train 7, there would be more jobs that would touch the lives of everyone particularly the host community.
He expressed joy how the NLNG had transformed from just a project to a very successful company in about 30 years.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, urged all shareholders to work hard to ensure the successful completion of the project which he said would boost government’s efforts to make Nigeria a fully industrialised nation.
Sylva also said the project would help the nation’s gas development aspiration.
NNPC’s Group Managing Director, Mallam Mele Kyari, that there was consensus among shareholders and board members to take the next step towards providing additional capacity which should be greater than what was on ground.
The NNPC GMD thanked President Muhammadu Buhari for his quick intervention which ensured the eradication of all pre-existing stumbling blocks on the path of NLNG Train 7 project
Also in the week under review, Minister of State for Petroleum, Sylva commended President Buhari at a ceremony to mark the execution of Shareholders Agreement between the NNPC, the Nigerian Content Development & Monitoring Board (NCDMB) and Zed Energy.
Total Nigeria Advocates Petroleum Subsidy Removal
Managing Director Total Nigeria, Plc, Mr Imrane Barry, says removal of petrol subsidy will help government to redirect its earnings to support infrastructure development for economic growth and development.
Barry made this known when he featured on a roundtable on Downstream and midstream at the Nigeria International Petroleum Summit (NIPS) in Abuja.
He spoke on the topic “The down/midstreams: Paths to the future through holistic and integrated solution”.
He said that signing of the Petroleum Industry Bill would help to unbundle the oil and gas industry and encourage development, private investment and create jobs.
“The petrol subsidy regime costs the country approximately 2.6 billion dollars (N1 trillion) per year and the country can no longer afford it.
“The removal of the subsidy will allow government direct more of its earnings towards infrastructure and social development,” he said.
He said that since government had declared decade of gas, there was need for Investment in Natural Gas.
He added that government needed to continue to push policies that would favour private participation and investment in the gas value chain, production, storage and distribution.
“Also, government needs to give incentives for investors in the sector, tax rebates etc to encourage long term participation.
“In the B2C sector, the government should put in place incentives for customers to switch from white fuels to gas powered machines for road transportation.
“They should continue investment in the nation’s critical infrastructure that aids trade and commerce,’’ he added.
He further called for the fixing of Apapa ports and other ports in Nigeria, development of interstate road network, fixing of rail lines for human and cargo transportation
Commenting on impact of COVID-19 pandemic to global oil market, he said that it made the market volume shrank by 30% while margins became weak(Losses) with aviation sector mostly affected for the following reasons.
He added that the global economy was badly affected generally due to airport closure, drop in international prices of jet fuel platts which , led to a huge loss in aviation business due to contractual agreement with international airlines coupled with large amount of “old stock” in tank.
“PMS is a regulated product, with the price fixed by the government; resulting in fixed margins.
“The devaluation of the Naira from N360 to N380 during the pandemic, coupled with rising inflation in the country further eroded this “fixed margin” for the players in the downstream sector,” he said
He urged government to ensure speedy passage of the PIB to help the sector play its part effectively.
Partners Execute Shareholder Agreement For Brass Products Terminal
The Nigerian National Petroleum Corporation, (NNPC), along with their partner, the Nigerian Content Development & Monitoring Board, NCDMB, and Zed Energy have executed a shareholders’ agreement for the establishment of a 50 million litre Petroleum Products Terminal in Brass, Bayelsa State.
The N10.5 billion Brass Petroleum Products Terminal project is expected to deliver an automated 50 million litre depot with two-way product jetty, automated loading bay, and 6 automated tanks for storage of 30 million litres of Premium Motor Spirit (PMS)and 20 million litres of Automotive Gas Oil (AGO) and Dual Purpose Kerosene (DPK).
While speaking at the signing ceremony, the Minister of State for Petroleum Resources, Chief Timipre Sylva commended President Muhammadu Buhari for his giant strides in the Niger Delta which is making a huge impact on the people of the area.
“I make bold to say today without any fear of contradiction that no President has impacted the people of the Niger Delta like President Muhammadu Buhari. Aside from what we are witnessing today, remember there is also the Brass Fertilizer & Petrochemical Company, the Oloibiri Oil and Gas Museum and the Oil & Gas Park in Ogbia, all under Mr. President,” the Minister stated.
Sylva added that the establishment of the Terminal further demonstrates Mr. President’s commitment to the enhancement of the livelihood of the Niger Delta people particularly, the riverine communities in Bayelsa State where people purchase products at exorbitant prices due to logistics challenges associated with transporting products to that area.
Speaking shortly after signing the agreement, the Group Managing Director of the NNPC, Mallam Mele Kyari said the Corporation was proud to be part of the project which aside ensuring products availability in all nooks and crannies of the Niger Delta, will also guarantee the nation’s energy security and generate employment.
“This Terminal will create 1,000 direct jobs during the construction phase, and over 5,000 indirect jobs during its operation. Considering the potential for employment when completed, this will definitely reduce youth restiveness in the Niger Delta area and will also address the problem of illegal refining in the area,” Kyari stated.
In his remarks, the Executive Secretary of NCDMB, Simbi Wabote stated that this milestone was as a result of strong interagency collaboration and public-private sector partnership.
“The NCDMB will continue to drive such partnerships across the industry to bring development in Nigeria,” he noted.
Earlier, the Coordinator of the Project and Group General Manager, National Petroleum Investment Management Services (NAPIMS), Mr. Bala Wunti stated that the project would enhance the economics of marine petroleum products distribution.
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