- On June 2, 2020, Kenya’s much-hyped Early Oil Pilot Scheme (EOPS) contract with Tullow Kenya expired
- Turkana oil fields reveal a larger reservoir which in Oil and Gas jargon is commonly referred to as Oil Initially In Place (OIIP).
- Total will proceed with the US$5.1 billion Ugandan oil project.
For a number of years now, the Burj Khalifa has been the definition of Dubai’s architectural marvels attracting almost 20 million visitors in 2019.
This architectural wonder will soon be the second tallest building in the world once the rocket-shaped Dubai Creek Tower which is over 1000 metres tall is complete. While the Creek Tower is expected to steal the crown from the world’s tallest building currently, there is another factor that remains unchanged for the two buildings. They are both in Dubai and just a short distance from each other.
In addition, a few decades ago, these buildings could probably have never been imagined since Dubai was a desert country with nothing much to show except for the oil reserves the country had but which had not been tapped.
This story changed with the discovery of oil fields in Fateh in 1966. The oil fields were quickly developed and three years later in 1969, the first batch of 180 thousand barrels of “black gold” was exported.
Afterwards, Dubai discovered other marine deposits of oil particularly Rashed and Falah and the onshore field of Margam. Oil production peaked in 1991 in the emirate when the total volume of crude oil was an estimated 410 thousand barrels per day.
Currently, Dubai produces 68 million barrels of the precious liquid annually.
Since the oil resource is finite, the country has reinvested its oil resources into buildings which have become a wonder of the world.
Kenya’s crude oil reserves
With the expertise gained over decades, Dubai is a strategic partner for African nations that are just beginning to tap into their crude oil resources. Kenya is a case in point.
On June 2, 2020, Kenya’s much-hyped Early Oil Pilot Scheme (EOPS) contract with Tullow Kenya expired.
The two-year contract signed in 2018 between Tullow and its joint venture partners Total and Africa Oil was termed successful since it served its purpose by providing critical technical data, logistical and operational experience, and training that would materially assist the governments and the partners on the journey towards Full Field Development (FFD).
The pilot scheme involved developing five existing wells in the Amosing and Ngamia fields located in Blocks 13T and 10BB and saw the transportation of 2000 bpd (barrels of oil per day) by road from Turkana to Mombasa.
On August 26, 2019, the maiden lifting of 240,000 barrels of Kenya’s crude happened making it the first-ever lifting of oil from East Africa to the international market. Some KShs1.48 billion (US$13,400,913) in revenue were received marking a major milestone in Kenya’s Oil and Gas industry.
But, this seems to have been the end to the oily fairy tale in East Africa’s largest economy.
The latest from Tullow shows that the company is unable to fully access the more than 80 per cent of Kenya’s estimated 2.85 billion barrels oil reservoir. Reports by The East African, a regional daily, shows that Tullow is limited in extraction technology which means that most of the oil reserves remain inaccessible for commercial exploitation.
In its latest update on its exploration programme in Kenya’s Turkana County, the British oil firm revealed that new audits of the Turkana oil fields reveal a larger reservoir which in Oil and Gas jargon is commonly referred to as Oil Initially In Place (OIIP).
The 2.85 billion barrels oil reservoir is in comparison to previous estimates of 1.77 billion barrels. An audit by Gaffney Cline Associates (GCA), a British petroleum consulting firm shows that commercially extractable volume has climbed to 585 million barrels from the previous estimate of 433 million barrels.
For perspective, the OIIP represents the total amount of crude estimated in a reservoir. The reservoir estimate could be higher than the oil that can be extracted for commercial use.
Uganda’s crude oil extraction
Uganda has made impressive strides towards extracting its oil despite many challenges that have faced the endeavour.
The landlocked East African country has plans to start pumping crude in 2024. With this, it is highly likely that French energy giant, Total will proceed with the US$5.1 billion Ugandan oil project.
Total is the largest investor in the region since 2012 meaning there is room for more investors in the sector.
Uganda is becoming a formidable oil and gas competitor with its sizeable reserves and an enabling regulation. The country’s proactive national oil company prioritizes local participation, inclusivity, and capacity building.
The country has 6.5 billion barrels of proven crude oil reserves and 0.5 trillion cubic feet of natural gas and has accelerated hydrocarbon exploration, large-scale project developments, and regional synergies, driving widespread socio-economic growth in the process, according to the African Energy Chamber (AEC).
Uganda has Tullow Oil, Heritage Oil Plc, Total and China’s CNOOC as some of the world’s leading International Oil Companies (IOC).
The Dubai Factor
The two East African economies have enormous potential in what they hold as crude oil reserves. By turning to countries like Dubai which has managed to build an entire futuristic economy from the proceeds of oil could be advantageous to them.
Just three decades ago, Dubai was a little more than a desert with patchworks of settlements and limited infrastructure. However, the country was timely in exploiting the opportunities offered by the oil boom in the United Arab Emirates (UAE). This strategy produced unprecedented wealth for the small Gulf nation.
As mentioned, oil is a limited resource and with this in mind, Dubai’s ruler Sheikh Maktoum bin Rashid Al Maktoum and his successor, Mohammed bin Rashid Al Maktoum, put into effect a plan that is turning the city into the world’s top tourist destination.
Dubai is hosting the World Expo this October and this is one of the opportunities it has in seeking investment opportunities in Africa. Generally, the UAE is seeking to deepen its trade ties with Africa.
It is also strategizing to reposition itself as a global hub for business and finance and as the Middle East’s business and financial capital for more than a decade the country has to rework economic partnerships.
In early September, Dubai announced this step where it looks to working with eight countries that have a high potential for growth.
Kenya and Ethiopia are the only two African countries mentioned alongside South Korea, Indonesia, Turkey, Israel, India and Britain.
Cumulatively, these countries make up 10 per cent of the world’s GDP and host a quarter of the world’s population.
With this kind of resume, Kenya is in a strategic position to ensure that its oil sector becomes profitable by tapping the skills and knowledge that the Emirate can offer.
For Uganda, the milestones are a good indicator that it could become an oil exporter by 2025 and Kenya has a lot to learn from its western neighbour.