Kenya to gazette up to 9 new oil and gas exploration blocks

NAIROBI Tue Feb 12, 2013 10:47am EST

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NAIROBI Feb 12 (Reuters) - Kenyan energy officials said on Tuesday the country was demarcating up to nine new blocks of onshore and offshore territory for the auction of licences for oil and gas exploration.

The new licensing round will introduce an auction-style format to licensing blocks in Kenya, Permanent Secretary for Energy Patrick Nyoike told reporters at an event hosted by Africa Oil Corp.

Previously Kenya operated more on a first-come, first-serve basis, but since it has become established as a known area for hydrocarbon deposits, it wants to demand more from companies that seek to drill in the country, energy ministry officials said.

Nyoike said Kenya would demand higher licensing fees and impose heavier work programme requirements, which means companies would be required to spend more money in the country.

"Things were different a year ago than now ... Kenya can demand more," Nyoike said.

The new area is expected to become available within a month, he said.

Kenya has become a magnet for exploration activity since announcing in March last year its first oil discovery by British explorer Tullow Oil to the north, followed shortly by a second find in the same region.

In the wake of those finds, international oil and gas companies snapped up what remained of Kenya's 46 exploration licenses.

Kenya's production-sharing contracts dictate, however, that explorers must relinquish 25 percent of the acreage in a licensed territory every two years. Tullow Oil and New York-listed Anadarko Petroleum both reached that point on a total of seven exploration blocks late last year.

The Ministry of Energy reclaimed the territory, which it is now in the process of demarcating into as many as nine new blocks for licensing.

Among the area available will be part of the Lokichar Basin, where Tullow made both its oil finds, and the Lamu Basin, where Apache made a gas find.

"Many, many companies have shown interest in coming to Kenya ... Chevron and Eni want more blocks," Nyoike said.

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