Play by Play: Lake Turkana and Lake Victoria

The discovery of oil in the Kenyan side of Lake Turkana in 2012 by Tullow Oil dramatically shifted the area’s oil and gas profile. It confirmed and expanded the optimism from the the discoveries in Uganda’s Lake Albert for the region.

The most northern of the great lakes of the East African Rift System (EARS), Lake Turkana is today dominated by one oil and gas company, Tullow Oil. Tullow operates four blocks in Kenyan territory, covering almost the whole area of the lake’s rift. Block 10BA covers the northern part and both the eastern and western shores of the lake, bordering Ethiopia; Blocks 10BB and 13T cover the south western shore of the lake; and Block 12B is in the south. Tullow also operates one block on the Ethiopian side of the border, to the north of lake Turkana. No other company holds acreage on the lake’s rift.

So far, the company’s nine discoveries are located in blocks 13T and 10BB, but Tullow suggests the finds have considerably de-risked the remaining blocks in the area. The first discovery was made through the Ngamia-1 exploration well in Block 10BB, which encountered over 200 meters of net oil pay in 2012. The Twiga, Etuko, Ekales-1, Agete, Amosing, Ewoi, Ekunyuk and Etom oil discoveries followed in both blocks. According to Tullow, proven reserves are over 750 million barrels of recoverable crude oil, and are commercially exploitable, with a potential to increase to up to 1 billion recoverable barrels following further exploration.

Potential for further exploration has been proven to reside in the Northern Turkana and Kerio basins, where Tullow has already started to drill. In early 2016, the company announced a new discovery in the Cheptuket-1 well in the Kerio Valley Basin, although details over the amount of reserves in place or its commerciality haven’t been disclosed. Hydrocarbon reserves in the rift are characterized as conventional light crude oil found at an average of 3,000 feet depth, reinforcing the thesis that Kenyan and Ugandan oil are similar in origin.

While low international oil prices have contributed to slow activity in Kenya, Tullow Oil announced in 2016 that it intends to see commercial production start in 2020, as Ugandan and Kenyan governments have cleared the debate on the construction of a common export pipeline, deciding to develop their resources independently. Uganda has opted for the construction of an export pipeline through Tanzania. The Kenya government has stated an intention to start oil production in blocks 13T and 10BB, even before the construction of a new pipeline, using trucks and railways to transport the oil to export terminals on the coast. A new pipeline connecting South Sudanese oil to the Kenyan oil fields, and then on to an export port in the Indian ocean is also under discussion. As solutions are established to transport the oil to an exporting port, it is likely that interest in the area will further rise and new discoveries should follow.

Tullow’s exclusivity in discoveries in Kenya might, however, not be long-lasting as other major players continue with exploration in the attempt to mimic the British company’s success. These efforts have so far been focused on the country’s eastern basins, both onshore and offshore.

Lake Victoria

Tullow Oil, in partnership with Tanzanian company Swala Oil and Gas, secured ownership of block 12B, covering the Kenyan part of Lake Victoria, the biggest of the EARS lakes. Following a license extension, the companies have announced plans to do a full-tensor gravity survey over the area to better ascertain drilling prospects, but no drilling commitments have been made. In fact, Lake Victoria has attracted little attention from investors, in comparison to other basins in the EARS.  On the other sides of the border, Uganda and Tanzania haven’t even defined exploration blocks around Lake Victoria.