Kenya, Uganda set to position E. Africa as the next oil frontier

An oil rig at Ngamia-1 in Turkana County. Ngamia-1 was Kenya’s first significant oil discovery by Tullow and Africa Oil in 2012. PHOTO | FILE 

By BRIAN NGUGI

Kenya and Uganda are set to position East Africa as the next oil development frontier, Bloomberg Intelligence has said.

The note based the findings on the discovery of several onshore deposits. They include the billion-barrel potential at Uganda’s Lake Albert and Kenya’s South Lokichar Basin.

“While early-stage, with full development not expected until 2020 or later, accelerating drilling activity, resource delineation and project advancement will deliver a pipeline of near-term catalysts for licence holders and investors,” said Bloomberg Intelligence industry analyst Will Hares.

The report further noted that investors seeking exposure to onshore East African oil developments have a wide range of options. Until now, both Kenya’s and Uganda’s economies have been agriculture based.

Despite the rosy projections, the report said obstacles including security risks, regional geopolitics, pipeline construction and capital outlays face the regional oil development activities.

Ngamia-1 was Kenya’s first significant oil discovery by Tullow and Africa Oil in 2012. Since then, the companies’ follow-on discoveries in the South Lokichar basin have exceeded the threshold required for development, the study noted.

“The most recent independent resource study highlighted growth at the Ekales, Amosing, Twiga and Etom fields. With rising resources at South Lokichar, planned drilling, a pipeline agreement and upstream studies advancing the site are accelerating toward a final investment decision in early 2018,” it said.

The two projects, Uganda’s Lake Albert and Kenya’s South Lokichar, are progressing independently though following Uganda’s pipeline agreement with Tanzania that prevented a proposed shared route with Kenya.

Both projects aim for full development by 2020. Africa Oil and partner Tullow Oil have said they could start small-scale production of crude transported by road and rail to Mombasa, in 2017.

READ: Tullow raises Kenya’s oil export hopes with March 2017 production date