For Online E-newspaper
The East African : Mar 9th 2015
The EastAfrican BUSINESS MARCH 7-13,2015 MININ G With fewer than 500 oil and gas wells, region is underexplored No≥th Af≥ica has 20,000 wells while West has 5,000 By KENNEDY SENELWA Special Correspondent East Africa is underexplored despite the discovery of crude oil and natural gas both onshore and offshore in recent times. The region has fewer than W 500 drilled wells, compared with 20,000 in North and 5,000 in West Africa. CFC Stanbic Bank blamed the state of affairs on exploration being conducted by small and mid-sized firms, who often sell assets to international oil companies after making commercial discoveries largely due to the high costs involved in production. It costs $25 million to drill an onshore well in Kenya and about $100 million offshore. Kenya has discovered 600 million barrels of oil onshore, Tanzania about 50 trillion cubic feet of gas and Uganda has 6.5 billion barrels of oil, and 500 billion cubic feet of gas. Industry players estimate that Kenya and Uganda require over $50 billion for oil production, transport and storage facilities. Tanzania needs over $20 million to build a gas liquefaction plant with an export terminal. “Tullow Oil Plc is drill- ing more appraisal wells in northwestern Kenya as the region has few super majors like Shell and ExxonMobil investing,” said Oscar Kang’oro, CFC Stanbic Bank head of oil and gas in East Africa. However, projects could de- layed because international crude oil prices have declined hen compared with the continent’s west coast, secto≥ ≥ound-up Stockport gets $295,000 loan for gold plant in western Kenya Stockport Exploration Inc has obtained a$295,000 bridge loan for its pilot gold recovery plant currently under development in western Kenya. The Toronto Stock Exchange-listed firm, which owns a gold exploration block near Kisii town, got the loan from its directors and other private investors through issuance of unsecured convertible notes. Under the terms of financing, the principal amount of the loan bears 12 per cent interest payable quarterly from August 25 this year, until maturity on February 25, 2018. Stockport ‘s chief executive Jim Megann said the company expects to repay the loan from the proceeds of the gold recovery plant currently being developed. The lenders have the option to convert the notes into shares at the rate of $0.05 per share on volition or if Stockport is unable to settle the debt three days after maturity. Metal Tiger, Kibo Mining to jointly explore gold in Tanzania Workers at an oil rig at Ngamia 1 in Turkana County, northern Kenya. Picture: File to less than $50 per barrel from about $115 in mid 2014. “Oil and gas explorers will be revising their budgets and deciding where to allocate their limited capital spend,” said consulting firmPricewaterhouseCoopers (PwC). The Nairobi-based Petroleum Focus Consultants said Kenya’s upstream investments in ongoing onshore and offshore exploration have slowed down due to oil price uncertainties, except for the Turkana basin. “It is when Kenya moves to the next stage of resource development in Turkana that we expect to see meaningful investments in production and transportation infrastructure,” said the firm’s director, George Wachira. Tullow and Africa Oil Corpo- ration, each owning 50 per cent of blocks 10BB and 13T, are required to drill more wells to verify the amount of oil in South Lokichar basin in northwestern Kenya before moving to the production stage. Tullow CEO Aidan Heavey said development studies have started and could result in the production of around 100,000 barrels of oil per day. “The joint venture partners are working with the Kenyan and Ugandan governments and their third party technical advisor to progress the pipeline development plan,” said Mr Heavey. Kenya’s government wants oil production to start in 2018. Tullow, China National Offshore Oil Corporation and Total of France are expected to start oil production in the Albertine basin in western Uganda in 2018. BG Group, Ophir Energy Plc, Statoil of Norway and ExxonMobil have discovered about 50 trillion cubic feet of gas offshore Tanzania. Nairobi-based Eduardo and Associates said host governments in East Africa ought to continue to make regulatory and legislative reforms to maintain the interest of investors and new players. It costs $25 million to drill an onshore well in Kenya and about $100 million offshore. “Regulators need to give time- ly approvals for industry to take bankable projects to the final investment decision stage,” said Patrick Obath, Eduardo’s managing consultant. Mark Essex, director of oil and gas KPMG Kenya, said governments can be proactive by putting in place attractive fiscal terms, and ensuring legislative and regulatory frameworks are clarified to reduce uncertainty. “Host countries able to ensure a more amenable environment for long-term oil and gas exploration and development, will ultimately become a more attractive investment location compared with their peers,” said Mr Essex. Chris Bredenhann, PwC’s Af- rica oil and gas advisory leader, said the key to companies surviving the ups and downs of the cyclical hydrocarbons market is to learn how to adapt quickly by being more agile. “We expect an uptake in merg- ers and acquisitions as players with strong balance sheets secure resources from those with less liquidity” said Mr Bredenhann. US ene≥gy fi≥m sues Kenya fo≥ cancelling licence WALAM ENERGY Inc wants to institute an international arbitration against Kenya for cancelling the firm’s licence for the exploration and development of the Suswa geothermal field. Suswa is expected to generate 70MW, The firm is represented by Nairobi-based J Miles & Co in the case filed on February 23 at the US-based International Centre for Settlement of Investment Disputes, against Kenya’s Ministry of Energy, and the Attorney General Githu Muigai. In 2012, Kenya cancelled WalAm’s li- cence for non-performance. A senior official from the Energy Ministry said WalAm’s licence was cancelled and Suswa field repossessed after the firm failed to carry out an environmental impact assessment study report as required by law. “The company did not submit any work report to the ministry,” said the official, who asked not be named. Investors holding geothermal resource licences were required to submit EAI reports to the National Environment Management Authority for approval, carry out feasibility studies, drill three wells in three years and put up a power generating plant in a span of five years among other requirements. ‘‘WalAm had limited appetite for risky drilling activities. It was very difficult for it to mobilise the required funds to undertake the initial development activities like drilling and infrastructure,’’ said a senior official in the power industry. WalAm of US got the Suswa field due to efforts by the ministry to attract private investors to geothermal exploration as the government did not have sufficient money. The ministry awarded WalAm and Marine Power Generation Ltd the Suswa and Akiira Ranch concessions in 2007. Africa Geothermal International Ltd was awarded the Longonot concession in 2009. By Kennedy Senelwa Metal Tiger Plc and Kibo Mining Plc have entered a joint venture for the Morogoro South goldprospective exploration portfolio in Tanzania. Kibo and Metal Tiger each own 50 per cent of the portfolio. Metal Tiger will be responsible for ongoing licence renewal fees with other maintenance costs of portfolio for minimum period of 12 months and a maximum of three years. Kibo Jubilee Ltd, a subsidiary of Kibo Mining, previously owned 100 per cent of the gold-prospective exploration portfolio consisting of 18 licenses covering a surface area of 1,400 square kilometres. Metal Tiger now holds a 50 per cent stake in the Morogoro portfolio as it has been issued new ordinary shares in Kibo Jubilee. Metal and Kibo are building on another joint venture for uranium exploration in Tanzania. Anadarko Petroleum to drill deep offshore well in Kenya Anadarko Petroleum Corporation plans to drill a deep offshore well in Kenyan waters, despite the firm reducing spending by about 33 per cent due to low crude oil prices. Kenya’s play-opening well is part of Anadarko’s nine to 12 deep water exploration or appraisal wells planned for 2015 in various places including Colombia and the Gulf of Mexico. “In 2015, we are confident in our ability to leverage our deep, high-quality portfolio of opportunities, strong balance sheet and efficient capital allocation to preserve value and maintain flexibility,” said Anadarko chief executive Al Walker. Anadarko owns offshore acreage L5, L7, L12, L11A and L11B in Kenya. The American company is yet to decide the actual exploration block where the well will be drilled in the Indian Ocean. Stamico seeks joint venture to redevelop Buhemba mine in Tanzania The State Mining Corporation (Stamico) is seeking a joint venture partnership for redeveloping Buhemba gold mine in the new Butiama district in northern Tanzania. The partner will provide equity capital, participate in re 51 Workers in a gold mine in Tanzania. Picture: File -developing Buhemba and processing of tailings (left overs after a mineral ore has been processed) about 50 kilometres south east of Musoma town. The Buhemba project has the potential to generate revenue for the Tanzanian government as it has both hard rock and tailings resources estimated at 610,590 ounces (17, 309kg) and 50,000 ounces (1,417kg kg) of gold respectively.
Mar 1st 2015
Mar 16th 2015