The High Court has come to a decision to stop British oil and gas firm Afren from completing the sale of its business in Kenya following a pending hearing of a suit filed by a creditor claiming $2 million (Sh200 million).
China’s BGP Group obtained the court order last week after it told Justice Fred Ochieng that Afren’s exit could see it forfeit the Sh200 million it is owed for surveys it conducted on behalf of the British entity. BGP says it carried out the surveys in 2014 and 2015, but was only paid in part. The firm claims that Afren is only willing to pay 25 per cent of the remaining Sh200 million, and wants the court to instead order for a full settlement of the dues. It further claims that Afren has already laid off most of its staff with the plan of exiting Kenya as soon as the sale of its oil blocks to Octant goes through.
“Whereas East African Exploration Limited is selling the oil blocks at a profit, it has declined to settle BGP’s claim and instead unlawfully insisted that the plaintiff must accept a payment of 25 per cent of the entire debt as a full and final settlement. Afren has no known assets in Kenya other than the oil blocks and will definitely disappear with BGP’s Sh200 million,” says Zhao Enhui, BGP’s general manager.
Afren owns Block 1 in Mandera, blocks L17 and L18 in Lamu through its subsidiary East African Exploration Limited. The firm is at the final stages of completing a sale of all its Kenyan business to Canada’s Octant Energy for an undisclosed amount. Afren is yet to respond to the suit.
The firm’s exit follows the massive drop in global oil prices from over $100 (Sh10,000) a barrel in mid-2014 to just $60 (Sh6,000) a barrel in 2016. This has caused several firms to dispose of their interests in Kenya. Australia’s Pancontinental Oil withdrew from Block L10B, where it had a 25 per cent interest, in April and in June exited Block L10A where it owned 18.75 per cent. Tower Resources of the UK exited the local market and decided to focus on areas that have greater potential. It had a 15 per cent interest in the Block 2B in the Mandera region.