5 August 2010

Nairobi — Centric Energy has signed an agreement with Tullow Oil Plc for a joint oil and gas exploration of block 10BA near Lodwar in Kenya.

The Canadian company said a binding agreement signed by the parties allows Tullow, a London Stock Exchange listed company, a 50 per cent interest in exploring oil and gas in the block in north western Kenya, subject to government approval.

Mr Alec Robinson, Centric's chief executive officer, said Tullow will earn a 50 per cent stake and assume operatorship and in return, reimburse Centric's acquisition costs for the production sharing contract ( PSC) of block 10BA, which adds up to US$750,000 (Sh60 million).

Energy Minister, Kiraitu Murungi, had in January signed an agreement with Centric for a block covering 16,000 square kilometres within the East African Rift System.

Tullow had discovered oil in Uganda in similar geological settings.

Mr Robinson said Tullow's success in Uganda will ensure block 10BA is explored using the most modern exploration technology, in accordance with recognised international environmental standards and principles

He added that Tullow is required to pay 80 per cent of US$30 million (Sh2.4 billion) to be spent in the first phase of three-years of production sharing contract on seismic survey to map areas with potential oil deposits.

The first well is to be drilled in five years, if results are encouraging.

Block 10BA is strategically located in the East African Rift System, which is enjoying increasing exploration interests and significant success.

Tullow has discovered in Uganda's Albertine rift, about 950 million barrels of recoverable oil.