Kenya plans to create 14 new onshore and offshore blocks for exploration of crude oil to be offered to international prospecting companies.

The demarcation of new blocks in Kenya will be done this year while Uganda and Tanzania conduct a competitive licensing round. The region has become a prime exploration spot due to the discovery of oil and gas.

Six hundred million barrels of oil have been discovered in northwestern Kenya. Tanzania has found 53.2 trillion cubic feet (TCF) of natural gas. Uganda has 6.5 billion barrels of crude oil and 500 billion cubic feet of gas.

Kenya will create 14 new blocks to increase the total number to 60. The aim is to reduce acreage sizes in order to accelerate the pace at which firms carry out seismic surveys to identify hydrocarbon deposits for well drilling.   

“Sessional Paper No 4 of 2005 on Energy provided for the reduction of block sizes to curb tendencies by companies to hoard them while carrying out work commitments in very small parts of the entire acreage,” said Commissioner for Petroleum Martin Heya.

Initially blocks were too large, covering about 20,000 square kilometres. The first revision was done in 2006 when the blocks were increased from 25 to 37 through a notice by the Ministry of Energy published in the Kenya Gazette.

Thirty blocks were licensed to 14 international oil companies by 2012. The second revision was done in 2013 when the number increased from 37 to the current 46. Forty-one blocks are currently licensed to 21 exploration firms. Four blocks are vacant.

Deep offshore block L25 is vacant as negotiations for a production sharing contract between Kenya and Statoil failed in 2012 as the Norwegian firm declined the terms offered by the Ministry of Energy.

Mr Heya said the Survey Department will subdivide acreage that is currently vacant and merge areas surrendered by licensed firms. It will demarcate 14 new blocks, which will be gazetted by the Energy Ministry in the third revision this year. 

“Firms retain a portion of a block deemed valuable and surrender 25 per cent of the original contract area at or before the end of the initial exploration period of two years for onshore or shallow offshore and three years for deep offshore,” said Mr Heya.

It is a must, under production sharing contracts signed by the government, for firms to surrender 25 per cent of the remaining contract area at or before the end of the first additional exploration period of two years. It also applies in the second additional phase of two years.

Tanzania blocks

The Tanzania Petroleum Development Corporation (TPDC) is preparing to offer blocks situated on the mainland to investors in a third onshore licensing round. The first onshore bidding was held in 2005 and the second in 2010.

TPDC’s managing director James Mataragio said the open onshore blocks are Tanga West, Lukuliro-Kisangire, Mandawa, Lindi West, Ruvuma South, Lake Rukwa North, Selous and Eyasi-Wembere. 

He said licensing rounds started in 2000 after Tanzania acquired data for deep offshore and demarcated blocks for competitive bidding. The first offshore licensing round was held in 2000, followed by another in 2001, 2004 and the latest in 2013.

Uganda plans to offer investors six blocks covering 2,983 square kilometres in the oil rich Albertine basin in the first competitive licensing of exploration rights to be held this year.

Uganda’s Energy and Mineral Development Minister Irene Muloni said the first competitive bidding is an important milestone as licensing had been on hold for about nine years.

She said the government will within three months issue a request for qualifications of interested firms to determine companies eligible to participate in the first licensing round.

The government expects signing of production sharing agreements together with the awarding of exploration, development and production licenses to be concluded in the last quarter of 2015.