U.S. firm completes sale of Kenya's oil block
12 February 2014, 21:43
Nairobi - U.S.-based Oil and gas exploration firm, ERHC Energy has completed its farm-out agreement with CEPSA, a Spanish firm for an oil block located in northwest Kenya.
The firm said in a statement on Wednesday it has sold a 55 percent stake in Block 11A located in Turkana County to the Spain- based energy company after getting approval from the government.
"CEPSA has acquired a 55 percent stake in Block 11A and will operate the block in exchange for certain considerations. ERHC retains a 35 percent interest in Block 11A," ERHC said in a statement on Wednesday.
The government through, the State-owned National Oil Corporation of Kenya, owns the remaining 10 percent.
ERTHC Energy said the parties will now proceed with a 2D seismic survey of at least 1,000 line kilometers of Block 11A in northwestern Kenya. BGP Kenya Ltd. will conduct the survey, which is expected to begin this spring.
Block 11A which encompasses 11,950 square kilometers or 2.95 million acres, is oil and gas exploration block in northwestern Kenya awarded to ERHC last year.
The block is situated on the border of South Sudan to the north, Block 11B and Lake Turkana to the east, and near Kenya's border with Uganda to the west.
"This is an excellent time for the entry of a renowned operator like CEPSA," said ERHC President and CEO Peter Ntephe.
"We have negotiated a mutually beneficial agreement that advances Block 11A toward drilling and enhances shareholder value. "
In addition to its oil and gas exploration interests in Kenya, ERHC holds interests in the Republic of Chad, the Sao Tome and Principe Exclusive Economic Zone (EEZ) and the Nigeria-Sao Tome and Principe Joint Development Zone (JDZ).
The funding is expected to meet work requirements as per the Production Sharing Contract (PSC) ERHC signed with the government in 2013.
The PSC states that the explorer has to conduct a seismic survey and drill at least one well within two years from the June 28, 2012 effective date.
The move comes as the government announced plans to issue more exploration licences for blocks in northern Kenya due to the increased activities in search for oil by foreign companies.
Senior official at the Energy and Petroleum ministry Felix Mutunguti reportedly said the government will hand over more oil exploration blocks to potential investors and formulate policies on sharing of revenue from the natural resource.
The energy ministry will relinquish two blocks in covering more than 15,000 square kilometers in Wajir as the search for oil deposits attracts more exploration companies.
The 2A block on offer measures 7,801 square kilometers while the 2B block covers 7,806 square kilometers are both in Wajir County.