Oil explorer Erin secures contract extension

Erin Energy, an oil exploration company that has interests in Lamu Basin, has been given permission by the government to proceed to the next stage of exploration which will include drilling an exploration well by the end of 2017.

The company has four blocks that are located in the Lamu basin and has finished the first stage of work on its onshore blocks.

Erin was also supposed to have finished the first phase of exploration work on its offshore blocks by August 8 but requested the energy ministry to give it a two-year extension.

Erin had earlier said that within the additional two years the firm would have brought another partnering company it needs to complete activities on its offshore blocks L27 and L28 where it says there are promising signs.

The firm is going ahead with its local operations despite the gloomy industry outlook, a result of the depressed price of oil on the international market.

Prices are at the $45 per barrel level, a six-year low. Erin recently disclosed it had incurred $6.1 million (Sh610 million) in operating losses from its Kenyan blocks for the first half of the year.

The firm has other assets in Nigeria, Ghana and Gambia. Tullow Oil, Africa Oil and Swala Energy are the other companies that have shown commitment to sticking to their exploration schedules. Australian exploration firm Swala Energy and its partner Tullow Oil are considering whether to drill a well on their Ahero-1 block located in Kisumu County.

“Tullow is currently carrying out further processing of data to define the deeper sedimentary section. The company is assessing the potential to farm down part of its working interest in Block 12B ahead of any drilling campaign,” said Swala Energy in an update.

Canadian Africa Oil recently announced that it had raised $50 million (Sh5 billion) from the International Finance Corporation (IFC) to fund work on its Turkana-based blocks.

Earlier, Africa Oil had announced that it had raised $100 million (Sh10 billion) from London-based private equity firm Helios.