Kenya, Japan state firms join to survey for oil
The state oil companies of Japan and Kenya have signed an agreement to survey the east African country, which has become a hot spot for exploration after the discovery of oil, and assess its petroleum reserves onshore, officials said on Wednesday.
National Oil Corporation of Kenya (NOCK) and Japan Oil, Gas and Metals National Corporation (JOGMEC) agreed to jointly conduct geophysical surveys to help evaluate whether there are commercially viable hydrocarbons in Kenya.
Geophysical surveys help exploration companies determine the areas where drilling is likely to have the most chance of success.
The deal, which will run for an initial year and a half, underlines the interest of international oil companies in East Africa and the Horn of Africa following several major oil and natural gas finds in the region.
In 2006 companies discovered oil reserves in neighbouring Uganda, and this year explorers found large natural gas deposits off the coast of Mozambique. At the end of March, Anglo-Irish explorer Tullow Oil and its partner Africa Oil Corp discovered oil in northern Kenya for the first time.
Tullow and Africa Oil have yet to determine whether their find is commercially viable.
Tullow said on Monday, however, that the thickness of the oil reservoir was greater than initially expected and that it had only drilled to the most shallow depths of the planned well - a significant sign for Kenya's potential as an oil producer.
About two dozen other companies are exploring for oil and gas onshore and offshore Kenya, including NOCK, which is actively exploring the 14T block in the southern part of the country's Magadi Basin. It acquired the block in November 2010.
NOCK and JOGMEC's first survey on 14T, known as a full tensor gravity gradiometry, is planned for June 2012. NOCK also said the companies would complete 2D seismic surveys and electromagnetic studies. It does not have immediate plans to drill on the block.
Companies exploring for oil and gas often sign joint ventures, such as the one between NOCK and JOGMEC, because the cost of surveying and drilling is high, sometimes reaching up to $50 million onshore.
In addition to NOCK's exploration efforts, it operates more than 100 petrol stations, sells its own petroleum products and is charged with helping develop an infrastructure plan to position Kenya as a global oil and gas trading hub.