West Africa may be one of the world's most recognised and prolific exploration and production regions for hydrocarbons, but it is East Africa that is currently enjoying its day in the sun. Following a series of recent gas discoveries offshore Tanzania and Mozambique, the first significant gas find offshore Kenya has been made by UK-based Tullow Oil, in partnership with the US's Apache Corp and Australia's Pancontinental Oil & Gas and Origin Energy.
While the news was met with initial disappointment in that no oil was found - and offshore gas fields are more difficult to monetise - the partners were rightfully pleased to have found about 52 metres of net gas pay in the Mbawa-1 well's shallowest target. Drilling has only reached a depth of 2,553 metres thus far, however, so the well could yet encounter oil on its way to a total depth of 3,275 metres, given that a working petroleum system has now been established. But the waters off East Africa are yet to produce a commercial oil find despite strong evidence of its presence.
Oil majors BP and Petrobras are enjoying considerably less success in one of West Africa's most under-explored frontier regions: offshore Namibia. Shares of their junior partner, Chariot Oil & Gas, tumbled by nearly two-thirds after the consortium's Kabeljou exploration well in the Oranje basin failed to find commercial hydrocarbons. Despite pre-drill expectations of up to 4.9bn barrels of oil in place, Chariot said the Nimrod delta target reservoir was much less developed than anticipated. The letdown comes just months after Chariot drilled the Tapir South exploration well offshore Namibia in the Namibe basin, which found excellent reservoirs but no oil or gas.
Namibia's offshore basins have been hyped up on their significant geological similarities to the very large hydrocarbon-bearing structures on the other side of the Atlantic, offshore Brazil. At least four enormous oil and gas discoveries have been made there in recent years containing a total of over 20bn barrels of oil reserves in the so-called pre-salt basins (located more than 4km below the sea bed, underneath a thick salt layer). In addition to BP and Petrobras, Spanish oil giant Repsol recently turned its attention to Namibia, having farmed into Tower Resources' offshore license 0010. The partners believe the block has the potential to contain as much as 9.3bn barrels of oil.
But the odds are against them. In the 40 odd years since the first well was drilled offshore Namibia - just under 20 wells have reportedly been drilled there to date - there has only been one significant discovery, the Kudu gas field, which is coincidently now majority-owned by Tullow Oil. Moreover, that field has never been developed due to various security or political issues, the huge capital costs required and technical challenges.
Other UK-based junior E&P companies with offshore Namibian acreage include Global Petroleum and Serica Energy, as well as Canada-listed Eco Atlantic, Energulf Resources and HRT Participacoes.
