An oil rig in Turkana County. Australian oil and gas explorer Swala
Energy has officially dropped its planned arbitration proceedings
against UAE-owned Cepsa over a 25 per cent stake in Kenya’s block 12B.
PHOTO | | FILE
NATION MEDIA GROUP
Australian oil and gas explorer Swala Energy has officially
dropped its planned arbitration proceedings against UAE-owned Cepsa over
a 25 per cent stake in Kenya’s block 12B.
This paves
way for drilling of the first well in the block, which is situated in
Kisumu, as the country steps up efforts to become an oil producing
nation.
In a notice to the Australian Stock Exchange
(ASX), Swala said it had reached an agreement with Cepsa, which is owned
by Abu Dhabi’s sovereign wealth fund, to transfer back the disputed
equity to Swala.
“We are pleased at the amicable
resolution of the issues... which allows us to focus on operational
development of the block ahead of a planned drilling campaign in 2015,”
said Mr David Mestres Ridge, Swala’s chief executive officer, in a
statement.
Swala was fighting to get back 25 per cent
stake sold to Cepsa after the latter declined to continue participating
in exploration activity on the block in July. Cepsa’s withdrawal took
effect on September 1.
While the value of the sale
remained undisclosed, a statement from Swala at the time indicated that
Cepsa would meet costs incurred by Swala up to Sh1.3 billion ($15
million) as the first two wells on the block are drilled.
In
September, Swala announced plans to go for arbitration to have its
share returned. The other partner on the block is Tullow Oil Kenya, with
a 50 per cent stake.
With the pact , Cepsa is expected
to re-assign the entire 25 per cent stake to Swala, which will increase
its interest to 50 per cent.
Block 12B is located in
the Nyanza Rift — which is part of the East African Rift System where
significant discoveries of oil, viable for commercial production, have
been found.
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