Kenya’s licensing delay may attract more investment

Despite growing global interest in Kenya’s oil and gas industry, its first competitive licensing round has been postponed to at least Q4 2014; however, this delay could serve as a long-term benefit for the country’s economy, as well as its oil and gas industry, says an analyst with research and consulting firm GlobalData.

International interest in Kenya’s oil and gas sector has intensified over the last 20 months, following Tullow Oil and Africa Oil Corporation’s announcement of the country’s first commercial oil discovery in block 10BB/13T within the South Lokichar Basin. According to GlobalData, block 10BB/13T alone could generate approximately USD 10B in revenue over a 30-year production period.

John Sisa, GlobalData’s lead analyst covering Upstream Oil & Gas in the Sub-Saharan region says, “The delay in Kenya’s first licensing round could prove beneficial to the country’s economy, as International Oil Companies (IOCs) could make additional, commercial oil and gas discoveries before the end of the year. This would in turn strengthen prospectivity and interest in the country’s oil and gas industry. Additionally, competition among IOCs during the delayed bidding process may be significantly greater than at present, and the round could include higher licensing costs and tougher fiscal terms that would maximize government revenues.”