China oil producer CNOOC to pull out of Kenya blocks

China’s CNOOC is pulling out of its two Kenyan licences but wants a 20 percent participation in another five blocks to be operated by Tullow Oil, a Kenyan government official said on Thursday.

CNOOC spudded a well in Kenya’s Block 9 in partnership with Canada’s Africa Oil and Taiwan’s CPC, which showed seven horizons of gas prospects. It tested four of them, said Patrick Nyoike, permanent secretary at the energy ministry.

“CNOOC is pulling out by December. I believe Africa Oil will remain because they have expertise in oil exploration. CNOOC was in L2, which they are also surrendering. My best bet is they don’t have expertise for oil exploration,” he told Reuters.

“They believe the consortium by Tullow and Africa Oil is better suited for this.”

London-listed Tullow is the operator of Africa Oil’s five licences in Kenya after a 50 percent farm-in agreement in September.

“They (CNOOC) have requested us to facilitate them to participate in the blocks being managed by Africa Oil and Tullow to the tune of 20 percent.”

Nyoike said the government felt CNOOC did not do a good job of the Bhogal 1 well in Block 9 and that it hoped Africa Oil would go back and carry out more work there.

“That did not come out well. There is a feeling that they should have done more,” he said on the sidelines of an electricity expansion project launch in Nairobi.

“There is a feeling that if Africa Oil can go back and do some work.”

Interest in East Africa, which is much less explored than West Africa, has been rising on the back of Tullow’s Ugandan discovery and a gas find by U.S. firm Anadarko off the coast of Mozambique in February.

Tullow also acquired a 70 percent interest in Centric Energy’s Block 10BA after farm-in agreement, bringing its licences in Kenya to six.

Tullow will be required to adhere to the initial agreement with Centric for that block, which is a 26 percent of windfall profit for the government, Nyoike said.

Canada’s Vanoil has completed seismic studies in its two blocks, Nyoike said.
Source: Reuters