Three foreign companies have cancelled their exploration activities for oil and natural gas in Kenya to reduce capital expenditure in the face of low liquidity.
The decline in global oil prices has made accessing funds for exploration difficult, forcing companies to maintain a manageable exploration portfolio.
Pancontinental Oil & Gas NL and its joint venture partner PTTEP of Thailand are withdrawing from offshore block L10A while Premier Oil Plc is pulling out of onshore acreage 2B.
Australia Stock Exchange-listed Pancontinental and PTTEP have issued notices of withdrawal from block L10A to BG Group.
Pancontinental’s chief executive officer Barry Rushworth said in a regulatory filing to the Australian Stock Exchange on June 1 that the firm will continue exploring block L6 with FAR Ltd and Milio International.
Mr Rushworth said the decision to withdraw from block L10A was made due to project costs. Drilling an offshore well costs about $100 million in Kenya.
Subject to ministerial consent, Pancontinental’s 18.75 per cent interest and PTTEP’s 31.25 per cent interest will be transferred to BG Group, who will then be the only remaining participant in the block.
Pancontinental withdrew a 25 per cent stake in block L10B that was 75 per cent owned by BG in April.
Tower Resources Plc has received a notification from Lion Petroleum Inc — a subsidiary of Taipan Resources Inc — that Premier Oil Plc has exited block 2B.
Premier owned 55 per cent of the acreage in northeastern Kenya, Taipan 30 per cent and Tower 15 per cent.
Under-explored region
London-based GlobalData said major discoveries in East Africa have seen exploration operations continue despite falling oil prices and discovery of more reserves is anticipated due to the region being under-explored.
“Although several firms have cut back on their global exploration budgets, the region continues to attract activity, led by emerging oil and gas hotspots in Kenya, Tanzania and Uganda,” said the energy consulting company.
The East African
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