Tullow Turns Down Kenya Oil Exploration Deal With CNOOC-Sources
23 February 2011 - 8:01AM
Dow Jones News
U.K.-based Tullow Oil PLC (TLW.LN) has turned down an oil
exploration partnership proposal from China's CNOOC (CEO) in at
least five blocks in Kenya, government officials said Tuesday.
Tullow has declined to sell a 20% stake in its five blocks in
the Lake Turkan Rift Basin--currently at an exploration stage--to
CNOOC, saying that it's too early to enter any deal, a Kenyan
Energy Ministry official, who asked not to be named, said Tuesday.
CNOOC previously explored unsuccessfully for oil in Kenya, then
exited all of its Kenyan licenses. Yet it offered in January to buy
a stake in Tullow's Kenyan licenses.
The Kenyan Western Rift Valley has similar geological properties
to Uganda's Lake Albertine Rift, Martin Mwaisakenyi Heya, Kenya's
commissioner in charge of petroleum, said last week. The discovery
of oil in Uganda's Lake Albertine Rift Basin has spurred greater
interest in Kenya's oil sector, prompting more international
companies to apply for exploration licenses, Heya said.
Tullow Oil has already notified the Kenyan government and CNOOC
of its position, but the U.K. explorer may consider a partnership
with CNOOC in the future if Tullow adds value to the assets by
discovering oil there, a Tullow official and a Kenyan government
official said.
A Tullow spokesman declined to comment.
A CNOOC spokeswoman said she could not immediately comment on
the matter.
CNOOC exited Kenyan oil exploration after three years of
extensive exploration activities with disappointing results. It
first entered Kenya's oil sector in 2004, acquiring licenses in six
blocks. But the company has relinquished the licenses to the
government, exiting its last block in December last year. Despite
the exit, Kenyan government officials say that CNOOC has been
trying to buy an interest in Tullow's Kenyan licenses.
Even as it exited Kenya, CNOOC struck a partnership deal with
Tullow and Total SA (TOT) in neighboring Uganda, where at least 1
billion barrels of oil have been discovered. That deal, however,
has been hampered by a protracted tax dispute between Uganda's
government and Heritage Oil PLC (HOIL.LN), Tullow's former Uganda
partner.
CNOOC is also interested in acquiring stakes on the Congolese
side of the Lake Albertine Rift, Ugandan government officials have
said.
This year, Tullow is planning to conduct five seismic surveys in
its Kenyan licenses to determine rock structures and drilling
targets, a Tullow company official has said. The company also plans
to drill at least one well in Kenya before the end of 2011.
Kenya has 34 oil blocks. It has so far licensed 22 blocks.
The Kenyan government is expected to issue exploration licenses
to U.K.-based integrated gas company BG Group (BG.LN) and to
Dominion Petroleum (DMPTF) by April.
-By Nicholas Bariyo, contributing to Dow Jones Newswires;
256-75-2624615 bariyonic@yahoo.co.uk
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