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The East African : Apr 6th 2015
The EastAfrican BUSINESS APRIL 4-10,2015 MININ G Kenya to create 14 more oil blocks This will inc≥ease the total numbe≥ to 60 with the aim of ≥educing ac≥eage sizes By KENNEDY SENELWA Special Correspondent K enya 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 An oil rig in Turkana County. The government is creating new oil blocks in a bid to speed up the pace at which firms carry out seismic surveys. Picture: File the current 46. Forty-one blocks are currently licensed to 21 exploration firms. Four blocks are vacant. Deep offshore block L 25 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 Initially blocks were too large, covering about 20,000 square kilometres; the first revision was done in 2006 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. Fi≥m to sta≥t wo≥k on Tanzania natu≥al gas field ORCA EXPLORATION Group Inc plans to start the first phase of developing Songo Songo natural gas field in Tanzania at a cost of $120 million. The project involves developing existing offshore wells that are currently suspended like SS-5 and SS-9; upgrade others like SS-7 and drill a new well to be known as SS-12. The Songo Songo field produces about 91 million standard cubic feet per day (MMCFD) of natural gas, 20 kilometres off Tanzania’s coast, which is less than the existing Songas Ltd infrastructure capacity of 102 MMCFD. The infrastructure includes two processing plants with a capacity of 35 MMCFD on Songo Songo Island; a 25-kilometre 12-inch pipeline to Somanga Funga and a 207-kilometre 16-inch gas pipeline to Dar es Salaam. Orca’s chief executive officer David Ly- ons said phase one of Songo Songo field development requires $120 million and between $20 million and $40 million more for one or two new wellbores if upgrading works are unsuccessful. “The development programme also includes the installation of a refrigeration unit at the Songo Songo processing plant, which is expected to start towards the end of this year up to the first quarter of 2016,” he said. Phase one is not dependent on the yet to be commissioned 517-kilometre pipeline from Mtwara to Dar es Salaam, as additional gas can be sold through Songas infrastructure to power generators and industrial clients. Orca has been holding discussions with the International Finance Corporation about funding for the first phase of expanding the Songo Songo gas field. “IFC is in the process of receiving its in- ternal approvals to provide approximately half the capital cost — $60 million — in quasi-equity financing to Orca’s operating subsidiary, PanAfrican Energy Tanzania Ltd,” said Mr Lyons. It is expected that additional gas will in future be delivered to consumers through the new pipeline subject to Orca concluding a new gas sales agreement with the Tanzania Petroleum Development Corporation. Statoil of Norway has also discovered about 1.8 trillion cubic feet of natural gas in Mdalasini-1 exploration well at the southernmost edge of offshore block 2, which brings total reserves to 22 trillion cubic feet. By Kennedy Senelwa secto≥ ≥ound-up London bourse-listed Goldplat seeks partner for Kenya gold mine Goldplat Plc is looking for a new partner to help it turn around the loss-making Kilimapesa gold mine in western Kenya after securing a one-year licence extension from the government. Goldplat’s chairman Brian Moritz said discussions to secure a funding partner for upgrading Kilimapesa were being held with interested parties as the London Stock Exchange-listed firm struggles to contain losses. “The board does not intend to use currently available funds for expansion of Kilimapesa,” he said. Goldplat had suspended its operations in Kenya in June 2013 to focus on cash-generating activities in South Africa and Ghana due to low gold prices and uncertainty over a new law that required foreign firms to be 35 per cent locally owned. 517-km Mtwara- Dar pipeline for transporting natural gas complete Tanzania has completed construction of the new 517-kilometre pipeline for transporting natural gas from Mtwara to consumers in Dar es Salaam. Amenix Plc said it had been informed by the state-owned Tanzanian Petroleum Development Corporation (TPDC) that the new pipeline to Dar es Salaam had been completed and hydrostatic pressure testing will begin soon. Amenix and its joint venture partner Solo Oil Plc are expected to start commercial production of natural gas from Kiliwani North field in the second half of this year. The new pipeline has three processing plants with two trains (processing units) each with a capacity of 70 million standard cubic feet per day of gas. 39 A drilling rig. Rift Valley Resources has acquired a firm that owns assets like rigs, trucks. Pic: File Rift Valley Resources raises $4m to acquire Tanzania-based firm Rift Valley Resources Ltd has acquired Mtemi Resources Group of Companies, which holds gold, copper and uranium exploration interests in Tanzania. Australian Stock Exchange-listed Rift Valley Resources recently raised $4 million through a private placement. Mtemi is a private group of companies owning assets including a rig, trucks and other equipment in Tanzania. Rift Valley Resources managing director Geoff Gilmour said the firm had completed the acquisition of Mtemi and the funds from the private placement will be used for other exploration activities in Tanzania and the Ozango project in Angola. Zambia president directs review of hiked copper royalties Zambia’s President Edgar Lungu directed the ministers for finance and mining to review the royalties that copper companies are charged by the end of last week. He said the ministers should consider reverting to last year’s royalties for the time being, following complaints from the Chamber of Mines. In January, Africa’s second largest copper producer increased royalties for open pit mines from 6 per cent to 20 per cent and the levy for underground mines from 6 per cent to 8 per cent, putting investments at risk. The government has been at loggerheads with mining firms over higher royalties and VAT refunds. The price of copper has declined globally due to weak demand in China.
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