Oil explorer exits Lamu Basin block

Oil and natural gas exploration machinery at an oil rig. Pancontinental Oil & Gas, an Australian exploration company, has announced its exit from block L10B located within the Lamu Basin. PHOTO | FILE  

In Summary

• The move leaves BG Group, which holds 75 per cent interest in the block through its subsidiary BG Kenya Ltd, as the sole operator. 
• The announcement by Pancontinental comes at a time when locally operating international oil and gas exploration companies have hinted at plans to scale down operations following a sharp decline in global oil prices that affected their cash flows. 

By IMMACULATE KARAMBU
More by this Author

Pancontinental Oil & Gas, an Australian exploration company, has announced its exit from block L10B located within the Lamu Basin at the Coast.

In a notice to the Australian Securities Exchange, the firm said it had quit the joint operating agreement with Britain’s Group and the production sharing contract signed with the Kenyan Government.

The move leaves BG Group, which holds 75 per cent interest in the block through its subsidiary BG Kenya Ltd, as the sole operator. 

“The company considers that the withdrawal is in the interest of prudent financial management whilst maintaining a manageable and prospective exploration portfolio,” said Pancontinental’s chief executive officer Barry Rushworth. 

DECLINING PRICES

Block L10B lies south of block L10A, also operated under a joint venture by BG Group (50 per cent), Pancontinental (18.75 per cent) and PTTEP of Thailand (31.25 per cent). 

Last year, BG Group drilled the Sunbird-1 well on block L10A that led to the discovery of 29.6 metres of natural gas deposit and 14 metres of oil, making it the first oil discovery in the coastal region. 

Exploration in block L10A is at a more advanced level. Block L10B is said to be sharing a similar geological structure which increases its chances for oil or natural gas discovery.

The announcement by Pancontinental comes at a time when locally operating international oil and gas exploration companies have hinted at plans to scale down operations following a sharp decline in global oil prices that affected their cash flows. 

Late January, BG Group announced plans to cut its budget and jobs this year as it takes the impact of falling crude prices that were at the lowest in the last six years.

The company said it would concentrate on its Queensland Curtis liquefied natural gas facility and offshore fields in Brazil.

BG Group’s gross exploration expenditure for last year totalled $1, 260 million, out of which $67 million was used on data acquisition in the Kenyan blocks.