Tower Resources and Premier Oil, plan to exit block 2B located in Anza basin, northern Kenya, following drilling of the first well that failed to show any crude deposits. The two companies had shown signs of exiting the Kenyan market after issuing an update on oil exploration in Kenya. Premier Oil (55 per cent interest) and Tower Resources (15 per cent interest) hold the license for block 2B together with Taipan Resources of Canada. Tower Resources came into the block last year after acquiring 15 per cent interest from Taipan Resources.


 “We have withdrawn from the area where we feel there is no medium-term likelihood of commercially worthwhile success. We intend to take advantage of the current difficulties in the sector to continue to assemble a high quality acreage portfolio in our focus,” said Tower’s CEO Graeme Thomson in an operational update.

Tower has also announced that it will close its East Africa office currently located in Uganda. With the increased budget resulting from low crude oil prices, many companies have opted out since 2014.

This comes after an Australian company, Pancontinental oil and gas is set to exit Kenya’s oil market after posting a loss of KES 43 billion net loss for the year ended June 30.The company attributed the loss to increased expenditure for writing off exploration licenses following its exit from Kenya’s block L10A and L10B located in the Lamu Basin. Block L10B lies south of block L10A that was operated under a joint venture by BG Group (50 per cent), Pancontinental (18.75 per cent) and PTTEP of Thailand (31.25 per cent).

Additionally, Pancontinental withdrew a joint operational agreement with Britain’s BG Group and production sharing contract with the Kenyan government. BG Group held 75 per cent in blockL10B through its subsidiary BG Kenya Limited, as the sole operator.

Since last year, oil exploration in Kenya has reduced by more than half due to various cost cutting measures adopted by oil and gas companies as low crude prices bite. The oil exploration sector has gone on a slow also after various explorers with operations in Kenya by announcing cuts or completed frozen capital spending for new projects.

In other developments, Kenya is responding to a case in which Somalia has gone to the ICJ, Hague to demand that its boundary with Kenya be adjusted to give Mogadishu a huge piece of it with significant oil deposits. The area being challenged is about 100,000 square kilometers, forming a triangle east of the Kenya coast. In 2009, Kenya and Somalia signed an MoU, which was then deposited to the UN in 2011. Later in 2012, Somalia accused Kenya of awarding offshore oil and gas blocks illegally to multinationals Total and Eni, an accusation Kenya rejected.

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