Tullow Oil discovers gas in first major find off Kenyan coastline
TULLOW Oil said it has discovered gas off the coast of Kenya together with two other companies. It is the first substantial gas find in Kenya.
Tullow made the find along with Australian explorer Pancontinental Oil & Gas and UK-based Origin Energy. Analysts welcomed the discovery but cautioned that the well is not complete and warned that it would be some time before there is sufficient information available to assess potential commercial value. Tullow said two months ago that it wanted to find oil as well as gas in Kenya so the result was not all good news.
Shares in Tullow were little changed in early in London and closed down 18 pence, or 1.3pc, at £13.86. Shares in Pancontinental soared 91pc, the biggest gain since 1993, during trading on the Australian stock exchange.
Pancontinental holds 15pc of the joint venture. Origin Energy owns 20pc and Tullow Oil owns 15pc. Operator Apache owns the remaining 50pc.
Tullow said it found the gas in the shallowest part of the Mbawa-1 exploration well in the L8 licence area off Kenya.
"A gas discovery on prognosis in the shallowest objective at Mbawa-1 is an encouraging start to our East African Transform Margin exploration campaign," said Tullow exploration director Angus McCoss. "This is the first hydrocarbon discovery offshore Kenya. The ongoing drilling remains on course to test for any deeper oil potential within this gas-prone region."
Apache said in July that it would drill Kenya's first deepwater oil well in August, a prospect that could add a $70bn (€55bn) crude find to the record natural gas discoveries along East Africa's coastline.
Apache said back in July that the Mbawa well is likely to strike oil based on seismic data and slicks seen on the Indian Ocean's surface. The drilling targeted as much as 700 million barrels, a resource valued at twice Kenya's annual economic output at today's oil prices.
"What we are looking at in this well is to see if we can actually change the paradigm," in what's been a gas-prone area, Tullow chief financial officer Ian Springett said two months ago. "It's a high-risk, high-upside well."
East Africa has become one of the world's most active exploration areas since Anadarko Petroleum Corp made the decade's biggest gas discovery off Mozambique. An oil find would be a boon for Kenya as the commodity is easier to sell than the gas found in neighbouring Tanzania and Mozambique, which will require spending at least $50bn on export plants. The Lamu basin, where Mbawa is sited, may hold as much as five billion barrels, according to one of the well's partners.
Explorers in East Africa including Anadarko, Statoil, Eni and BG Group, have discovered more than 100 trillion cubic feet of gas, enough to meet US demand for more than four years.