BBC Monitoring Service (UK) : Kenya: "Heightened expectation" of new oil discoveries along country's coast: “In Kenya, oil exploration has recently intensified - nearly 43 years after Royal Dutch/Shell drilled the first ever known trial wells in northern Kenya.” (ShellNews.net) 27 Dec 04

Dec 27, 2004

Text of report by Haroun Wandalo entiteld "Great expectations as Kenya hopes to strike oil at the coast" published by Kenyan newspaper The Standard web site on 27 December

Kenya's quest to join the league of emerging African economies propelled by mineral discoveries got new impetus last week. Reports about possible oil and gas discoveries along the coastal strip are highly exciting.

Even though it is not the first time that Kenyans' hopes have been raised, a new report released this week by a team of oil explorers attached to the Australian seismic group has heightened expectation. For a long time, the country has waited, often with baited breath, for the ultimate confirmation.

Oil discovery could, no doubt, have far-reaching positive ramifications for Kenya and the region. Majority of the countries comprising the so-called Asian Tigers rose to prosperity when they struck oil. The tremendous growth and development of these countries is, however, also due to proper management of resources.

Kenya has, happily, done quite a lot with meagre agro-based resources and is capable of achieving fantastic levels of growth with oil as one of its leading exports. Countries like Singapore and Malaysia are riding a crest - thanks to the oil windfall several years ago.

Malaysia for instance, has had remarkable economic success and all this shows in the rapid industrial revolution in the Islamic nation. It could also happen to Kenya if we were to live the dream. For instance, while Malaysia achieved nationhood in 1957 and had a GDP of just 300 dollars, Kenya which became independent six years later had an income per head of 320 dollar.

Malaysia was basically a struggling agro-based economy but after striking oil it now boasts a national income per head of nearly 6,000 dollares when Kenya is languishing at just over 200 dollars.

Latest information is that data collected from an offshore survey by an Australian firm on possible oil and gas reserves has rekindled hopes for Kenya's quest for the elusive "black gold".

The National Oil Corporation of Kenya (NOCK) had licensed two key foreign firms - Woodside Energy of Australia and Dana Company - among others, to prospect for oil in the entire Kenyan coastline.

After a two-and-half years' seismic data survey, Woodside Energy has finally submitted its report to government and indications are that the country could be gearing for better days ahead.

A final report envisaged to pave the way for eventual sinking of oil wells is expected to be handed in mid-next year. Even as the Australian experts left the country early this week, they were optimistic of their conclusions.

The government has, however, previously been guarded about the progress of oil exploration. A few years ago, exploration in North Eastern Province was abruptly terminated even as indications remained high that there were oil deposits in the area.

Experts agree that before a final decision can be made on eventual drilling of the black gold, certain concerns must be addressed. These include the fact that oil mining could pose serious threats to other key sectors of economy like tourism and agriculture. Environmental degradation comes to mind following the bloody riots that rocked Nigeria's Ogoni region. Warring ethnic groups in Nigeria's oil-producing delta region were and still demand greater share of the country's oil wealth derived from their regions.

Just last month, after initial reports about possible oil discoveries, Lamu residents did not hide their expectations when they said they were following with deep interest the developments off the archipelago. Apart from local people demanding a stake, agriculture could be seriously affected as farmers abandon their lands to prospect for oil.

But oil discovery does not mean instant riches for a country and its people. It could result in regional conflicts and mayhem, as has been the case for many years in the Sudan. In spite of being Africa's second largest oil producer, 70 per cent of Angola's population lives in abject poverty and constant wars.

Although the Ministry of Energy has been guarded on the explorations, confirmed reports however, say targeted high-grade areas include blocks L5, L7, L 10 and L 11 said to form nearly 20,000 square kilometres of the coastline.

Two other blocks, L 6, L 18 and L 19 are being ceded to two other oil exploration firms, Pan Continental and Afrex, which are working in partnership with Woodside Energy.

Similar activities have been reported in neighbouring Tanzania. This has given rise to heightened hope with analysts predicting East Africa could become one of the world's top oil exploration fields in coming years. There is renewed interest in Africa today by major oil companies because oil reserves are dwindling in other markets.

Experts believe Africa is naturally under-explored, including big oil producers like Nigeria and Angola. Chris Matchette-Downes of Jebco Seismic, which has reviewed geological data taken from Africa's eastern seaboard, says he has seen a lot of evidence of oil.

Whether Kenya will defy conventional geological wisdom that its coast has gas but not oil is part of the on-going investigations.

Woodside Energy is hoping to replicate its strike in deep waters off the west African country of Mauritania in 2001, an area it says shares similar geological likeness with the Kenyas' coast.

In Kenya, oil exploration has recently intensified - nearly 43 years after Royal Dutch/Shell drilled the first ever known trial wells in northern Kenya. So far, at least 12 trial wells have been drilled.

NOCK Managing Director Mary Kimotho recently predicted that the earliest date Kenya could begin actual oil production is 2012. But she hastened to add that the time-frame could be reduced, depending on events on the ground.

Apart from Australia, other multinational firms known to have shown interest in oil exploration in Kenya are from China and the Petronas from Malaysia. Political considerations have been a factor in the "official silence" since the first information about possible oil finds in Kenya way back in early 80s.

Last June, then Energy Minister Ochillo Ayacko, however, admitted that there was the possibility of striking oil. Ayacko said there were up to seven offshore exploration blocks seismologists had been working on and which had shown a lot of promise.

Ongoing explorations revealed geological structures and other seismic information similar to those in Chad, Cameroon and Sudan where oil is currently drilled.

In recent months, various studies of the exploration working Kenya have been analysed in Australia and Singapore, further raising Kenyans' hope.

Source: The Standard web site, Nairobi, in English 27 Dec 04

© BBC Monitoring