Afren to Invest $120 Million in East Africa as Oil Race Quickens

Written by Sarah McGregor – Bloomberg

Afren Plc (AFR), a U.K. oil and gas explorer, plans to spend as much as $120 million in two years drilling wells in East Africa as the region’s untapped resources lure competitors from Royal Dutch Shell Plc (RDSA) to Total SA.

Afren intends to drill four exploration wells, Associate Director Galib Virani said today in an interview in Kenya’s capital, Nairobi. The company has licenses in Kenya, Tanzania, Madagascar, Ethiopia and the Seychelles, he said, without specifying where each well will be located.

East Africa has become one of the world’s most active exploration areas since Anadarko Petroleum Corp. (APC) made the decade’s biggest gas discovery off Mozambique. The growing interest in the region was evident in the bidding war this year between Shell and Thailand’s PTT Exploration & Production Pcl (PTTEP) for Anadarko’s London-listed partner Cove Energy Plc.

East Africa is set to become the “jewel in Afren’s exploration portfolio,” Virani said. “We have always been attracted to the geology in East Africa. The upside is very significant.”

The five nations targeted by Afren hold an estimated 5.8 billion barrels of resources, mainly oil, according to seismic and aero-magnetic data collected by the company at a cost of $125 million, Virani said. Afren started building its East African portfolio in mid-2010, and plans to use cash from its Nigerian operations to finance work in the region, he said.

The London-based company and its partners already began drilling the Paipai-1 well in Kenya’s Block 10A, where the U.K. explorer has a 20 percent stake. The block is operated by Tullow Oil Plc. (TLW)

Elsewhere in Africa, Afren holds licenses in Nigeria, Ghana, the Republic of Congo and Ivory Coast, Virani said. It also has producing assets in Iraq.