Zarara Oil and Gas will spend US$ 30 million to drill two wells in block L4 and L3 in Lamu County. The firm will seek to establish quantity of gas deposits and whether the quantity is commercially viable.
In 2013-14, the company dealt with data processing and data interpretation, which indicated that there could be gas. Environmental Impact Assessment (EIA) was also conducted and the report handed over to the National Environment and Management Authority (NEMA). Also, seismic studies have been done and a total of up to 400 kilometer line prospects of gas deposits were found.
Zarara Oil and Gas is currently operating under an 18 month license extension through to June 2017, to the First Additional Exploration Period on both of the production sharing contracts. The oil and gas explorer had been on the radar of the Energy ministry for apparently delaying their contractual agreements.
The fully-owned subsidiary of Midway Resources International (MRI), Zarara is the main operator on the two blocks with a 75 per cent stake, while Swiss Oil Holdings controls 15 per cent with the remaining 10 per cent being the carried interest by the Kenya government.
Already the U.S. Trade and Development Agency (USTDA) and Zarara Oil & Gas Limited have concluded a $996,600 grant agreement to evaluate the technical, economic and environmental aspects of the proposed Lamu gas-to-power energy project on Pate Island, Lamu. This project will bring down the cost of electricity in the country by a half from the current 18 US cents to seven US cents.
The oil and gas sector is estimated to generate around 3,000 jobs in eight years.