KENYA plans to adopt licensing rounds henceforth in the award of oil blocks.

With this plan, it would be abandoning the present arrangement whereby it negotiates with individual oil companies in the process of awarding blocks.

Making the disclosure at a regional petroleum conference, Hudson Andambi, senior petroleum geologist at Kenya’s Energy Ministry, said: “We have been practising (an) open-door policy for licensing of blocks but this will be replaced in due course with licensing rounds where investors will compete and whoever comes with the best (deal) will be the one given the licence to operate that block”.

“The discovery of oil and valued gas, and the intensified drilling activities are therefore a good transition for Kenya from a frontier area to one that is going to have a discovery phase,” Andambi added, according to Reuters.

Speaking at the same conference, Energy Ministry Permanent Secretary Patrick Nyoike said Kenya also planned increasing the signature bonuses companies pay when they are granted a new licence to $1 million from $300,000.

Kenya had no problem attracting exporters and should therefore demand more favourable contract terms, according to Andambi.

The size of new exploration blocks Kenya leases in the future will also be minimised so more companies can explore.

All but one of 46 exploration blocks have now been licensed, but Nyoike later said Statoil had halted talks over the last open block after the government refused to change some production-sharing terms on the grounds that it would give the Norwegian state oil company an unfair advantage over other explorers.

Tullow Oil and Anadarko Petroleum recently relinquished parts of seven blocks – two onshore and five offshore – under the terms of their production sharing contracts, with the acreage to be re-demarcated as six new blocks that are set to be auctioned by the end of this year.

East Africa has become a magnet for explorers following major gas finds off Mozambique and Tanzania by the likes of Anadarko, Eni, BG Group and Statoil.

US player Apache recently made Kenya’s first offshore gas discovery with its deep-water Mbawa-1 find in the L8 Block, although more volumes are needed to make the play commercially viable.

Oct 25, 2012

Source: http://sweetcrudereports.com