Tullow and Africa Oil are eyeing new frontier basins within their portfolios in Kenya and Ethiopia following new oil discoveries announced by the two firms in the Lokichar Basin, which they co-own in northwestern Kenya.

The firms announced the two further finds, Amosing-1 and Ewoi-1, in Block 10BB on Wednesday, saying that the Lokichar Basin — which has so far posted 100 per cent exploration success rate — could hold in excess of one billion barrels of oil.

The new finds have given Tullow Oil the confidence to initiate oil production talks with the Kenyan government and focus on the construction of an export pipeline for transporting oil from Uganda, Kenya and South Sudan to the upcoming Lamu Port.

“The results to date are positive for achieving a commercial development from the discoveries made in this basin,” said Paul McDade, the chief operating officer of Tullow Oil Plc.

“Given the significant volumes discovered and the extensive exploration and appraisal programme planned to fully assess the upside potential of the basin, Tullow and partners have agreed with the government of Kenya to commence development studies,” said the company in a statement.

The firms have announced seven discoveries from Lokichar basin. The two partners are conducting a study for an export pipeline to commercialise the discoveries, with project sanction in 2015/16, said analysts at Citigroup in an investor note released on Thursday.

Kenya, Uganda and Rwanda are planning to build a crude oil pipeline under the Lamu Port-South Sudan-Ethiopia Transport (Lapsset) Corridor project.

The pipeline is expected to run 1,500 kilometres from Hoima near Lake Albert in western Uganda to Lamu port on Kenya’s Coast. The project is expected to be commissioned by 2017.

READ: Tough terrain pushes Kenya-Uganda oil pipeline cost to $4 billion

In the Lapsset master plan, Kenya had factored in the existence of a pipeline capable of transporting 500,000 barrels per day from South Sudan to Lamu, projected to cost $3.5 billion.

Tullow, with joint venture partners China National Offshore Oil Corporation (CNOOC) and Total of France, is expected to start commercial oil production in the Albertine basin of western Uganda by 2017.

Uganda Minister for Energy and Mineral Development Irene Muloni said Tullow Oil will be given production licences by March. In September 2013, Uganda issued its first oil production license to CNOOC.

Tullow will now drill the Emong-1 well, next to the Ngamia field, and the Twiga South-2 appraisal well. The firms plan to test the South Kerio sub-basin in Block 10BB while plans are also being made to drill in Block 10BA on the western shore of Lake Turkana (2H 2014).

Elsewhere Africa Oil is currently drilling the El Kuran-3 well in Block 8 in Ethiopia, with results expected by March.

READ: Oil companies to scale up drilling activity in 2014

Citigroup researchers said Africa Oil and Tullow Oil have decided to discontinue exploration in Block 10A including the previously planned test of the Paipai well due to the lack of commercial viability.

Kenya is yet to issue an oil production licence but Tullow is likely to be among the first beneficiaries following what it called “significant finds.”

The firm said that drilling results from the two wells, both located on the same block, show that the Lokichar basin could have as much as 600 million barrels of oil.

Kenya’s offshore drilling activities also received a boost this week when BG Group announced it has started drilling the Sunbird-1 well in Kenya’s offshore oil exploration area L10A near the Mombasa seaport.

Additional reporting by Kennedy Senelwa