August 10, 2012 / 11:14 AM / 6 years ago

Apache to start drilling offshore well in Kenya

* Kenya discovered oil deposits onshore in March

* E. Africa attracting oil and gas explorers

NAIROBI, Aug 10 (Reuters) - U.S. explorer Apache Corp. plans to drill an offshore well off the Kenyan coast soon, company executives said, expanding the search for oil in the east African country that struck oil onshore in March.

East Africa and the Horn of the continent have become hot spots for oil and gas exploration in recent years, spurred by new finds in countries including Kenya, Uganda, Tanzania and Mozambique.

However, oil companies have yet to make finds offshore.

Apache will drill in an area known as the Mbawa prospect on Block L8 in the Indian Ocean.

“Spudding is imminent,” Barry Rushworth, CEO of Pancontinental Oil and Gas, one of Apache’s partners with a stake in the block, said in an email to Reuters.

Apache, the operator in the block, is partnered by British firm Tullow Oil, which made Kenya’s onshore discovery this March, and Australian firms Origin Energy and Pancontinental.

Tullow has placed the odds of the well’s success at 15 percent, while Pancontinental has estimated the well could contain as much as 4.9 billion barrels of oil.

In 2007, Australia’s Woodside Petroleum drilled Kenya’s last offshore well at a cost of nearly $100 million, but found no oil deposits and paid the government to exit from a contract that had required the firm to drill a second well.

Apache said in July it had taken special precaution to ensure the operation goes smoothly. It has enlisted the Kenyan Navy to protect the drillship from pirates who have been hijacking ships in the Indian Ocean for ransom.

The well is expected to take 60 days to complete and reach 3,250 metres below the sea in water depth of 860 metres.

“The main concern that we have with regard to security is the potential for piracy, and with that regard, we have partnered with the navy,” said Tim Gilblom, managing director of Apache Kenya.

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