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The East African : June 23rd 2014
The EastAfrican 46 DISCOVERY OF OIL, NATURAL GAS IN SUNBIRD-1 WELL BG to submit plans after Lamu oil find The oil column is believed to be 14 met≥es thick beneath a gas column of 29.6 met≥es By KENNEDY SENELWA Special Correspondent B G Group together with its venture partners announced last week Wednesday that it had made the first discovery of oil off the Lamu coast in Kenya. The London Stock Exchange- quoted firm, working with PTT Exploration and Public Company Ltd (PTTEP) and Pancontinental Oil and Gas NL found oil and natural gas in the Sunbird-1 well that was drilled by the Deepsea Metro 1 rig in offshore exploration area L10 A. The oil column is believed to be 14 metres thick beneath a gas column of 29.6 metres. Well drilling was completed in March this year after starting in January. The cost of drilling an offshore well in Kenya is about $80 million. “The Sunbird-1 oil is the first- ever discovery offshore Kenya. It is the only offshore oil column ever reported seaward of the eastern coastal margin of Africa, from South Africa to northwest tip of Somalia,” said Pancontinental’s chief executive officer Barry Rushworth. He said calculating the Sunbird results has been a lengthy process due to the complexity of the data derived from the well and the data obtained shows the block L10A consortium will find commercial oil. BG owns 50 per cent of acreage L10A, Pancontinental 18.75 per cent and PTTEP 31.25 per cent. Premier Oil Plc last year decided not to participate in drilling Sunbird and its 20 per cent equity was taken up by other partners. Prior to Premier’s withdrawal, BG owned 40 per cent of acreage OWNERSHIP An offshore oil rig. Picture: File L10A while PTTEP of Thailand had 25 per cent and Australia Stock Exchange-listed Pancontinental held 15 per cent. Tullow Oil Plc and Africa Oil Cor- poration have discovered 600,000 million barrels of oil in the South Lokichar Basin in northwestern Kenya and production will start in 2018 if the government approves field development plans. The plans for laying pipelines and other production facilities will be submitted by Tullow and Africa Oil to the government for approval in the final quarter of 2015. Mr Rushworth said Sunbird re- sults are the first proof of the presence of oil offshore Kenya and BG as the operator of block L10A continues to analyse the well data and will recommend an exploration $80 million The amount it costs to drill an offshore well in Kenya A JOINT REPORT The EastAfrican AS THE region’s economies and population grow, various authorities in charge of cities and urban areas are looking at improving the general infrastructure to improve the business environment and well being of urban dwellers. The Nairobi County government recently launched a new master plan that seeks to harmonise the city’s urban transport, railway, airport, power, water supply, sewerage, telecommunications and solid waste management. This will see the creation of cities within the city, involving new commercial and residential developments outside the current central business district. Nairobi suffers major traffic gridlock esti- mated to cost the economy from Ksh50 million ($572,213) to Ksh200 million ($2.3 million) daily, a problem also experienced by the cities of Dar es Salaam and Kampala. Dar es Salaam already has three municipali- The master plans will help decongest cities. Picture: File programme for the future. “We believe that this is a play- opening discovery in Kenya’s Lamu basin. Because of the Sunbird discovery, we expect to see a significant increase in industry interest offshore Kenya,” said Mr Rushworth. Evaluate Energy Ltd, a consul- tancy firm based in London, expects Kenya’s recent oil discoveries to hold ample opportunities for both juniors and established oil companies alike in the coming 12 months. “Kenya’s recent successes have been oil discoveries rather than gas; this will whet the appetite of the world’s largest companies and should result in some prominent bidders when the auction begins,” said Evaluate Energy. There are currently five licensing rounds for exploration areas due to close during 2014 on the continent including Tanzania, Libya, Angola, Republic of Congo and Kenya, with the latter possibly the most exciting of them all. BG owns 50 per cent of acreage L10A, Pancontinental (18.75 per cent) and PTTEP (31.25 per cent). Premier Oil Plc last year decided not to participate in drilling Sunbird and its 20 per cent equity was taken up by other partners. Prior to Premier’s withdrawal, BG owned 40 per cent of acreage L10A while PTTEP of Thailand had 25 per cent and Australia Stock Exchange listed Pancontinental held 15 per cent. Hartleys Ltd, a brokerage com- pany, expects any success made by Sunbird well in area L10 A will have direct positive implication for exploration block L6 and L9 as the three acreages are in the same locality. Hartleys said in a research note issued to investors that several targets similar to the one tested by the Sunbird well exist along the Kenya Coast including offshore area L6 and L9 owned by FAR Ltd of Australia. Regional cities must upg≥ade as population g≥ows ties offering decentralised administrative and social services and is in the process of building rapid transport systems to decongest the city and upgrade the city’s storm drain system. Kampala is working on expanding and reha- bilitating major roads and introducing a public transport system. So how is Nairobi’s proposed master plan go- ing to change the city, or make it better than the others? According to Tom Odongo, the Nairobi Coun- ty executive in charge of housing, lands and physical planning, the master plan has identi- fied major deficiencies in the current structure. “We now have a city with a dominant em- ployment centre and residential areas spreading out. The current master plan has caused an unsustainable use of resources through traffic jams, high cost of transport and dependence on private vehicles,” he says. The new master plan addresses the transport networks, and proposes radial roads that will replace the interlink roads that dot the city. The new master plan is also proposing a “railway city” to revamp the CBD by using the existing Kenya Railways land, and re-planning it for new developments. Like Dar’s rapid transport system, the Nairo- bi County Roads Taskforce has proposed changes to the public transport system, such as barring public service vehicles from accessing the city centre. This will see passengers dropped at satellite termini are to be constructed at locations around the CBD. By Allan Olingo and Justus Wanga BUSINESS JUNE 21-27,2014 Bu≥undi tax ≥evenue up as ≥efo≥ms pay o≠ By PETERSON THIONG’O The EastAfrican BURUNDI’S TAX revenue rose 11 per cent in the year to June, aided by tax reforms, increased compliance and better performance of the economy. Burundi’s revenue authority said tax collection increased to BIF241 billion ($157 million) in the first five months of 2014 compared with BIF216 billion ($141 million) in the period last year. The jump is attributed to high compliance among the country’s largest taxpayers, even as the IMF projects that the country’s economy would grow by 4.7 per cent this year, up from 4.5 per cent last year. But the IMF warns that the country will need to tighten tax loopholes to plug the expected revenue losses as it moves to alter its effective corporate tax rates to bring them in line with other EAC member states. “Implementation of the pro- gramme has been challenging, owing to revenue losses associated with the reduction in the corporate tax rate in line with harmonisation efforts within the East African Community and the elimination of the one per cent minimum tax on loss-making companies,” said the IMF in its latest assessment of the country’s economy released mid this month. Measures taken Burundi has over the past five years reformed its tax collection body by establishing a tax authority as well as increasing tax compliance. The reforms have seen tax collections increase significantly. Burundi’s outgoing tax chief Ki- eran Holmes said that tax revenue should, this year, increase by 13 per cent to BIF633 billion ($408 million). “We have managed to get a 100 per cent compliance from the largest taxpayers, and 83 per cent compliance from medium taxpayers,” said Mr Holmes. The growing collections will be crucial for the country’s target of cutting its dependence on aid as well as reducing macroeconomic volatility. Donors currently finance over half of the country’s budget. The increase in tax collection al- so helps the country to improve its economic indicators in line with targets set under the EAC Monetary Union Protocol, which is expected to come into force in 2025. Currently, Burundi has a tax to GDP ratio of about 17 per cent compared with 25 per cent for Kenya; 18 per cent for Uganda and 20 per cent for Tanzania. The Protocol sets a tax to GDP ratio threshold of 25 per cent for all member countries.
June 16th 2014
June 30th 2014