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Oil Discovery in Turkana, Kenya

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Submitted By Kehinde
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OIL DISCOVERY IN TURKANA, KENYA
Following the announcement by the Kenya Government of the oil find in Turkana, the media has been awash with articles on this important discovery. The Ministry of Energy has provided the information on Turkana.
Kenya has four petroleum exploration basins Lamu, Anza, Mandera and Tertiary Rift with a combined surface area of about 500,000 square kilometres. For effective petroleum exploration these basins have been divided into smaller units called Blocks. Depending on progress made in exploration, these Blocks are revised from time to time to include new ones created to meet the increasing demand by oil prospecting companies. Currently there are 46 of them from an initial 21 blocks in 2005.
Oil exploration which includes drilling of exploratory wells is an extremely capital intensive undertaking and for countries such as Kenya without any proven commercial discoveries (otherwise defined as frontier exploration areas), it is usually difficult to attract major oil prospecting companies. Kenya status as a frontier exploration area, therefore, is a key disincentive to major international oil companies who have the requisite resources for underwriting attendant high petroleum exploration risks. Such major and high profile oil prospecting companies usually divert their risk capital to countries with proven and delineated hydrocarbon reserves and where production is on-stream or being negotiated.
As at 2005 only three companies, Star Petroleum, Afrex and Pancontinental Oil & Gas were carrying out exploration in seven of the 21 Blocks. Due to the high investment risk, Star Petroleum partnered with Dana Petroleum and both invited and signed participation agreements for a number of blocks with Woodside Energy of Australia, a multi-billion dollar natural gas company. Under these agreements, Woodside Energy became the principal partner and

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