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Afren Receives 15 Month Extension in Kenya’s Block 1

The government of Kenya through the Ministry of Energy has granted Afren through its subsidiary East African Exploration (EAX) a 15 month extension to the current Second Additional Exploration Period as a result of security concerns in the area.

EAX and its JV partner Taipan Resources through its subsidiary Lion Petroleum have a two well commitment on the block during the current exploration period.

Block 1 is on the western margin of the Mandera-Lugh Basin in north-eastern Kenya, bordering both Somalia and Ethiopia, where it is connected to the Ogaden Basin.

An oil seep discovered by the Tarbaj well in the south-west corner of the block confirms the presence of hydrocarbons. Analogous data with the Ogaden Basin also suggests there may be other potential source rocks and reservoirs.

In 2013, Afren concluded the interpretation of 1,900 km of 2D seismic, which identified leads and prospects and a number of new play concepts many of which have successful analogues in the Ethiopian sector of the basin immediately north of Block 1.

Seismic operations commenced on Block 1 during October 2014, exploration drilling will start after the processing and interpretation of these seismic lines, an Environmental Impact Assessment (EIA) for the drilling operations is ongoing.

In February its partner Taipan Resources began an arbitration action against East African Exploration (Kenya) Limited in response to certain breaches to the Joint Operating Agreement signed between EAX and Taipan Kenya based subsidiary Lion Petroleum Corp in respect of Block 1.

In its Notice of Arbitration, Taipan which is seeking not less than US$10 million as restitution for the damages it has suffered claims that among other things, EAX, as Operator in Block 1: failed to diligently pursue joint operations or meet minimum work obligations, follow good and prudent petroleum industry practices followed by international petroleum industry operators under similar circumstances, follow agreed contract award procedures, and follow agreed accounting procedures.

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