NAIROBI: The Government has extended prospecting licences for US oil company, Erin Energy Corporation, in a move that points to Kenya’s growing extractives industry, which is anticipated to earn the country a windfall in petrodollars.
Erin currently has licences to prospect in Kenya and owns nine licences, onshore and offshore oil blocks in Nigeria, Ghana, the Gambia and Kenya. The company has obtained an eighteen-month extension of the Initial Exploration Period (IEP) of its offshore Kenya blocks, L27 and L28, both of which it holds the sole operating rights and a 100 per cent stake.
“We are delighted to receive this eighteen-month extension,” said Segun Omidele, Senior Vice President, Exploration and Production. “This additional time will allow us to acquire 3D seismic data and to look for suitable partners to join us in the exploration of the blocks.”
Shares of the company, which trades at the New York Stock and Johannesburg Stock exchanges rose 12 per cent, exceeding its 30-day average volatility, climbing to $3.76, up from $3.37 recorded in the previous trading session.
The extension, the company says, would offer extra time to acquire, process, and interpret 3D seismic data on both blocks. Three months ago, Erin submitted a successful application to the Government allowing it to enter First Additional Exploration Period (FAEP) of both onshore blocks L1B and L16. The approval was based on results of 2D seismic data interpretation.
The move by Erin to announce further exploration into the oil blocks under its license renews confidence in Kenya’s nascent oil industry even as drilling firms tapper off activity owing to a slump in international oil prices.
Earlier this year, the World Bank stated that oil exporting countries like Nigeria and Angola will have to cut back on oil subsidies to shore earnings to their exchequers. The bank further stated that for the case of East Africa, which has just made significant discoveries of oil and gas deposits, prospecting activity and investment might have to be scaled down at least in the short-term, as investors move to dull the impact of low commodity prices.
Kenya has been bullish about the prospects of becoming an exporter of oil ever since Tullow Oil and its partner, Africa Oil Corporation, announced potential discoveries of an estimated 600 million barrels of oil in the South Lokichar Basin back in 2012.
Since then, there have been other significant finds that have more than doubled the country’s estimated production capacity, with the Government mulling construction of an oil pipeline to transport its finds to the export markets.
