Canadian owned oil firm, Africa oil has sold half of its stake in 3 blocks to Danish owned Maersk Oil. Africa Oil is Tullow’s joint venture partner in Turkana’s exploration fields and co-owns the blocks on an equal basis.
The fields comprise of Blocks 10BB, 13T and 10BA in Kenya and the rift basin, south Omo blocks in Ethiopia. The farm-out is as a bid to raise some $350 million for use in further exploration and developmental costs. The first oil discovery by the two companies was in Block 10BB in March 2012 where significant crude oil deposits have since been found in the surrounding 3 blocks .
Africa Oils President and CEO Keith Hill stated that “This transaction puts Africa Oil in the position of not requiring any additional equity financing prior to first oil and will allow us to weather the current difficult oil price environment should it continue into 2016,”
Crude prices oil prices have been tumbling since June 2014 and have plunged to as low as $30 per barrel as of Tuesday 12th January 2016. Majority of the oil companies have been forced to cut back on exploration projects, staff and investments. The commencement of oil production in places where recent discoveries have been made is likely to be delayed. However, Kenya seems to be hopeful that production shall begin towards the end of 2016, even as the global crude oil prices are predicted to recover within the next 2 years.
“We feel Maersk will be an excellent partner in terms of technical and financial strength and experience critical to moving the development project forward,” said Mr Hill.
It is at this time though that Kenya could consider setting infrastructure in place, such as pipelines, refinery upgrade, security and storage in readiness for when the oil production begins.