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The East African : January 20th 2014
38 PLANS AFOOT FOR PRODUCTION STAGE Firms strike more oil in Kenya Tullow and Af≥ica Oil made two mo≥e discove≥ies in Lokicha≥ Basin, which has posted 100pc explo≥ation success ≥ates so fa≥ By STEVE MBOGO Special Correspondent T ullow 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 coown in northwestern Kenya. The firms announced the two further finds, Amosing-1 and Ewoi1, 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 MORE DISCOVERIES Tullow and Africa Oil have announced seven discoveries from Lokichar basin so far. The two partners are conducting a study for an export pipeline to commercialise the discoveries. The Ngamia 1 oil rig in Turkana. Tullow and Africa Oil have made further oil discoveries in the Lokichar Basin. Picture:File 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 PortSouth 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. In the Lapsset master plan, Kenya had factored in the existence of a pipeline capable of transporting 500,000 barrels Lapsset By ALEX NGARAMBE The EastAfrican THE GOVERNMENT of Rwanda is going ahead with plans to liquidate Umubano Hotel in Kigali despite a case before the Supreme Court seeking to halt the process. Soprotel, a Libyan government-affiliated company, holds majority shares (60 per cent) in the hotel while the rest is owned by the Rwandan government. Soprotel has appealed to the Supreme Court after the high court sanctioned liquidation. The government has appointed a temporary liquidator who has called on the hotels’ creditors to register their claims before the end of this month. The liquidator is undertaking the process through the powers of the provisional execution of the judgment given by the court to continue with the exercise while the appeal is in 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- Kenya, Uganda and Rwanda are planning to build a crude oil pipeline under the Lamu Port-South SudanEthiopia Transport (Lapsset) Corridor project 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. Citigroup researchers said Africa Oil and Tullow Oil have decided to discontinue exploration in Block 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. 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 Libya moves to cou≥t to halt liquidation of Rwanda hotel the Supreme Court. “We have not received any claims yet, but we are identifying creditors and for the interest of the creditors we shall go ahead even though the case has been taken to the supreme court,” said Emmanuel Butare, the temporary liquidator. $19 million offer A Rwandan court had earlier rejected a $19 million offer by the Libyan government to allow it to retain majority shareholding in the four-star hotel, months after plans to refurbish it stalled. Following the UN sanctions imposed on Libya during the anti-Muammar Gaddafi revolution, the Libyan shareholders assumed their representation in Soprotel. In a complaint lodged in the lower commer- cial court in September, the Rwandan government, which is the minority shareholder, raised concerns over the failure of Libya to honour its contractual obligations, including renovating the hotel. According to the government, shareholders of the hotel failed to agree on business transactions and management of the hotel leading to the need to liquidate it. The contractual obligations that were al- legedly violated relate to an increase in share capital, renovation and expansion of the hotel and sale of minority shares. However, the Libyan government has, through its legal team, said it would appeal the court’s decision. In an earlier interview with Yusuf Ndutiye, one of the lawyers for the Libyan government, he said they would go to the Supreme Court because the liquidation was unacceptable. He also expressed his client’s disappointment with Rwanda’s decision to reject an irrevocable letter of credit of $19 million secured by the Central Bank of Libya. The EastAfrican BUSINESS JANUARY 18-24,2014 Elect≥icity p≥ices in Uganda to ≥educe By ISAAC KHISA The EastAfrican UGANDA’S electricity regulator has kicked off the implementation of the Automatic Tariff Adjustment regime resulting in a slight reduction in electricity prices. The Automatic Tariff Adjustment is a system that factors in the exchange rate of the local shilling against the dollar, the fluctuations in oil prices at the international market as well as local inflation levels in electricity tariffs. For that, the Electricity Regulatory Authority eased the price of electricity for domestic consumers from $0.21 to $0.20 per unit effective January 16, citing an improvement in economic conditions in the country. The commercial consumer’s tariff was lowered from $0.20 to $0.19 per unit while the medium industrial tariff was reduced from $0.18 to $0.17 per unit. The large industrial tariff saw a 0.8 per cent reduction to $0.133 per unit. However, the lifeline tariff was $0.20 The cost of per unit of electricity effective January 16, down from $0.21 increased from $0.04 per unit for the first 15 units to $0.06 per unit, while the price for street lights was maintained at $0.19 per unit. ERA Chairman Richard Apire said the electricity tariff cuts resulted from an appreciating shilling, a decrease in international fuel prices and the expected reduction in energy distribution losses from 23 per cent last year to 20 per cent this year. While ERA officials could not predict electricity tariffs for the second quarter starting April, the onset of heavy rainfall in the country and the likely decline in oil prices at the international market could further lower the tariffs. Umeme’s dashed hopes The new end-user tariffs dashed hopes for the country’s electricity distributor Umeme, which had since last year requested the government for an increase in electricity tariffs despite an appreciating shilling against the dollar from Ushs2,688 in 2013 to Ushs2,524, as well as minimal dispatch of thermal power in the first quarter of 2014 due to favourable hydrology. Earlier, the public listed company had proposed end-user tariffs for domestic consumers be increased by 10 per cent starting this year resulting in a raise in tariff from $0.21 to $0.23 per unit. Umeme also wanted the tariffs for medium industries increased from $0.18 to $0.22 and for large industries $0.15 instead of $0.12 per unit consumed in spite of the prevailing economic conditions.
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