Africa Oil Operations in Kenya

Africa Oil has played a major role in the recent oil exploration boom in Kenya. Africa Oil is the operator of Block 9 in which Marathon Oil also has a working interest. Africa Oil also holds working interests in joint in Blocks 10A (in a joint venture with Tullow Oil and Afren), 10BA (in a joint venture with Tullow Oil), 10BB (in a joint venture with Tullow Oil), 12A (in a joint venture with Tullow Oil, Marathon Oil Corp. and the National Oil Corporation of Kenya (NOCK)) and 13T (in a joint venture with Tullow Oil). Block 10 BB and 13T were the sites of the first oil discoveries in Kenya, thought to contain 280 million barrels (MMbbl) and 87 MMbbl of gross contingent oil resources respectively. The CEO of Africa Oil Keith Hill has announced that the find, estimated at 368 MMbbl, passes the threshold of commercial viability.

Africa Oil has seen its share prices increase by 800 percent since oil was discovered. Tullow Oil estimates that Kenya may be able to begin exporting oil as early as 2016, although CEO Keith Hill believes it may take somewhat longer.

=Terms of Production Sharing Contract for Block 9=

Africa Oil and Marathon Oil signed a Production Sharing Contract (PSC) with the Kenyan government for Block 9. The companies completed drilling the Bogal-1 well in May 2010 and entered the first additional exploration phase in December 2010 (which will finish in December 2013). Although Marathon Oil and African Oil were required to relinquish 25 percent of the original contract area at the end of the first exploration period, the government asked them to maintain 100 percent of the contract area waiving the requirement to relinquish. A 25 year development period starts once oil is discovered with a possible further extension of 10 years.

Furthermore, an "annual information form" published by Africa Oil outlines additional information on the terms of the contract related to:
 * minimum required exploration expenditure: US$2.5 for drilling of one exploration well (during first additional exploration period); US$3 million for additional exploration well (during second additional exploration period)
 * relinquishment of contract area: at the end of the first additional exploration period, the contractor must relinquish 50 percent of the remaining contract area
 * government interest: the government may acquire an interest of up to 13 percent of the total interest in the development area

=See also=

Terms of Production Sharing Contract for Block 10A

Terms of Production Sharing Contract for Block 10BA

Terms of Production Sharing Contract for Block 10BB

=References=