Stiff competition is already emerging among international companies to enter East Africa’s energy sector buoyed by Kenya’s discovery of oil and Tanzania’s abundant deposits of natural gas.

Ophir Energy Plc predicts East Africa is on the path to becoming a major hydrocarbons (oil and gas) province; the discovery of more resources will spur the arrival of international firms who want a foothold in the region.

Kenya has 16 open oil and gas blocks. The country has received expressions of interest for nine vacant blocks from oil companies like Global Pacific Advisors, Camac Energy, ERHC Energy and Total SA of France.

East Africa is also receiving interest from Royal Dutch Shell Plc, state-owned Petrobras of Brazil, Statoil of Norway and Exxon Mobil.
BG Group discovered more natural gas than initially anticipated at Jodari-1 well in block 1 offshore Tanzania while Tullow which in recent years had a successful streak in Uganda, has found crude oil in north western Kenya.

The oil is in Ngamia-1 well, being drilled in block 10BB in Turkana county. In the second quarter of 2012, Tullow will start sinking Paipai-1 well in Block 10A in Marsabit county. The localities have similar geological structures.

Africa Oil Corporation said block 12A near Lake Turkana, which it owns jointly with Tullow, has potential for fossil fuel deposits as the locality has oil slicks showing the presence of a working petroleum system.

(Read: Turkana County oil discovery lifts Kenya’s long-term growth prospects)

Afren Plc, Apache Corporation and Anadarko Petroleum are among firms set to drill in Lamu Basin, but it remains to be seen how Kenya’s offshore plays out. Tanzania and Mozambique are ahead with gas discoveries.

Pancontinental Oil and Gas said Kenya’s offshore has potential for a discovery as the geology is similar to that in Tanzania and Mozambique, while some wells drilled in the past had oil and gas shows.

Apache Corporation, Origin Energy Ltd, Pancontinental and Tullow are to jointly drill in the third quarter of 2012 in block L8 of the Mbawa prospect, which has the potential to contain more than 4.9 billion barrels of oil.

“Pancontinental believes it has identified an oil-prone ‘sweet spot’ offshore Kenya. This can be verified by drilling,” said Barry Rushworth, chief executive of the firm which has interests in blocks L6, L8, L10A and L10B.

He said offshore acreage is being aggressively pursued by a number of major international companies, as Kenya is a very attractive country for oil and gas exploration besides being a key energy consumer.

Anadarko Petroleum with other partners recently completed a 3,500-square kilometre seismic survey to map drilling sites in blocks L5, L7, L11A, L11B and L12. Two wells will be drilled either late this year or in early 2013.

“Anadarko in 2011 drilled Tubarao and Camarao natural gas in the offshore Area 1 of Rovuma basin in Mozambique. We are keen to develop other sets,” said its East Africa exploration manager William Tedesco.

The London Stock Exchange quoted Afren Plc plans in the second half of 2012 to drill a well in either offshore L17 or L18 in Kenya as a number of potential leads and prospects have been identified near Mombasa.

“Prospects have been identified in the acreage that is adjacent to Afren’s Tanga block in Tanzania. A seismic survey is being done in our block 1 in northern Kenya,” said the firm’s director, Patrick Obath.

More surveys

China Offshore National Oil Corporation (CNOOC) abandoned the Boghal well in block 9 in Kenya after failing to get commercial gas. Africa Oil Corporation of Canada has carried out more surveys in block 9.

Africa Oil’s chief operating officer, James Phillips, said the Kinyonga prospect had been mapped and drilling work will soon commence to establish the resources existing with the locality.

Tullow Oil, which was recently joined by CNOOC and Total of France as joint venture partners in Uganda, plans to drill 12 more wells this year in the Lake Albert basin and develop a refinery and pipeline among other things.

“Some scale refining could in start in 2013 with major production in 2016. A basin-wide plan of development will soon be approved by the government of Uganda,” said exploration manager Ian Cloke. He said Tullow had discovered 1.1 billion barrels of oil in Uganda and wants to replicate its discovery record in both Kenya and Ethiopia.