Kenya’s parliament backs Vanoil Energy license cancellation

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The energy and transportation committee has backed the decision to terminate the oil exploration license of Vanoil Energy in January this year.

In a report tabled in parliament the committee says the Canadian company was unable to explore any oil in the country after it ran into losses.

The committee through its vice chairman John Munuve also said that the company’s inability to explore for oil showed that the company was only in the country to speculate thus being in breach of contract.

In February the company released a statement to inform its investors that it was in talks with the government for a license renewal.

“Vanoil Energy Ltd. wishes to confirm ongoing discussions with the Kenyan Government with regard to its license renewals in Kenya.These talks are now at a key stage and the Company expects them to conclude imminently. At such time, Vanoil will provide an immediate information update to the market.”

The company that holds two onshore blocks 3A and 3B and a 10% interest in offshore block L9 saw its license expire in January this year after an extension of three years with the energy cabinet secretary Davis Chirchir declining to renew its contract.

Lagdera legislator Mohamed Shidiye has however defended the company which has so far spent KES3.2 billion to shoot 2D seismic in Blocks 3A and 3B and moving drilling rigs to site was a clear indication that the company was not speculating.

Shidiye accuses the ministry of denying Vanoil Energy a license renewal in an attempt to award the Block to other preferred bidders.

Vanoil originally acquired blocks 3A and 3B in October 2007 through the signing of a Production Sharing Contract (PSC) with the Government of the Republic of Kenya. These blocks cover 24,912 km2 in Kenya’s Anza Basin and are geologically analogous to the prolific Muglad and Melmut Basins of South Sudan.

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