East African exploration moves up to the next level

While Mozambique is attracting most attention as a new hydrocarbon producer, its neighbours to the north are also enjoyed an unprecedented boom in oil and gas exploration.

In August, BG Group announced that its Mzia 3 well in Tanzania had yielded twice as much gas as Mzia 2, which was drilled last year. The well, which was drilled in 1,800 metres of water, produced 101m cubic feet of gas a day, or 17,000 barrels of oil equivalent a day.

The Mzia and Jodari discoveries on Block 1 are estimated to hold 9 trillion cubic feet of recoverable hydrocarbons, with a further 6 trillion cubic feet on blocks 3 and 4.

The British firm is becoming increasingly confident that these discoveries will be big enough to justify the construction of an LNG scheme in Tanzania. BG and partners Ophir Energy and Pavilion Energy will take the final investment decision on the construction of the plant in 2016, with first production due in 2022. The consortium will continue to appraise the extent of the discoveries it has made to date. Other investors in the Tanzanian gas sector include ExxonMobil and Statoil.

While most production is likely to be exported in the form of LNG, the government of Tanzania hopes to oversee the construction of a new gas pipeline from Mtwara in the far southeast of the country to Dar es Salaam to provide gas for power generation and industrial production. It will probably run parallel to the existing south-north gas pipeline that carries gas from the Songo Songo scheme for much of its length. The Export-Import Bank of China is likely to provide most of the $1.2bn construction costs.

Activity in Kenya perks up
Tullow Oil is continuing to appraise its Etom, Ewoi, Ngamia and Amosing discoveries in the South Lokichar basins in Kenya. Exploration director Angus McCoss commented: “Continued success in appraisal of the Ngamia and Amosing fields reinforces our belief that the South Lokichar basin holds very considerable potential which we hope to replicate in additional basins.”

The Etom 1 well discovered oil in late August, prompting Tullow and partner Africa Oil to extend their 3D seismic survey over the northern half of the basin, where several prospects have already been identified. Further wells will be drilled in the Central Kerio and North Turkana basins on blocks 10 BA and 10 BB.

Africa Oil has also discovered hydrocarbons on Block 9, which it operates with a 50% stake, alongside partner Marathon Oil, and is also active with Tullow over the border in Ethiopia’s South Omo Block and in the Rift Basin Area Block. However, it has announced that it is to give up blocks 7 and 8 in the Somali Basin because of the lack of commercial prospects for development, despite the discovery of some hydrocarbon potential.

The chief executive of Africa Oil, Keith Hill, said: “We are quite pleased with the Etom discovery which extends the proven petroleum system to the northern portion of the Lokichar basin and de-risks several large prospects in that area.”

He added: “We have an exciting exploration portfolio in the new basin opening wells, of which we plan to drill six by the end of next year. We are confident that our early successes will be repeated in at least one additional new basin as we move forward to develop the large reserves we have discovered to date.”

However, future exploration efforts may be affected by a challenge filed against the government of Kenya by the government of Somalia with the United Nations. The latter is challenging Kenya’s interpretation of the existing maritime boundary between the two countries and has announced that it regards talks on the issue to date as having failed.

Nairobi may feel aggrieved over the case as its troops have fought in southern Somalia to shore up the position of the Somalia government against Islamist militant forces that continue to control most of the country.

Mogadishu believes that its position will affect oil and gas exploration on seven blocks on acreage that is currently regarded as Kenyan territory.