The Inside Track to East Africa's Economies
Tezza Solutions
N.S.E Share Price
...NSE SHARE Index: 4264.66  UP by 3.08 points | Kakuzi Ord.5.00  77.00  -3.00 | Rea Vipingo Plantations Ltd Ord 5.00 16.45  0.00 | Sasini Ltd Ord 1.00 11.55  0.00 | AccessKenya Group Ltd Ord. 1.00 10.00  0.00 | Car & General (K) Ltd Ord 5.00 49.50 DNT | CMC Holdings Ltd Ord 0.50 10.40  -0.10 | Hutchings Biemer Ltd Ord 5.00 20.25 DNT | Kenya Airways Ltd Ord 5.00 39.50  0.00 | Marshalls (E.A.) Ltd Ord 5.00 14.20 DNT | Nation Media Group Ord. 2.50 173.00  -1.00 | Safaricom Ltd Ord 0.05 4.20  0.05 | Scangroup Ltd Ord 1.00 60.00  -0.50 | Standard Group Ltd Ord 5.00 39.50 DNT | TPS Eastern Africa (Serena) Ltd Ord 1.00  66.50  0.00 | Uchumi Supermarket Ltd Ord 5.00 14.50 DNT | Barclays Bank Ltd Ord 2.00 69.50  0.50 | Centum Investment Co Ltd Ord 0.50  22.25  0.25 | CFC Stanbic Holdings Ltd ord.5.00 79.00  0.00 | Diamond Trust Bank Kenya Ltd Ord 4.00 146.00  -1.00 | Equity Bank Ltd Ord 0.50 28.75  0.25 | Housing Finance Co Ltd Ord 5.00 28.00  0.75 | Jubilee Holdings Ltd Ord 5.00 187.00  1.00 | Kenya Commercial Bank Ltd Ord 1.00 23.25  0.25 | Kenya Re-Insurance Corporation Ltd Ord 2.50 10.60  -0.10 | National Bank of Kenya Ltd Ord 5.00 47.00  0.50 | NIC Bank Ltd 0rd 5.00 52.00  0.50 | Olympia Capital Holdings ltd Ord 5.00 5.00  0.05 | Pan Africa Insurance Holdings Ltd 0rd 5.00 76.00  -3.50 | Standard Chartered Bank Ltd Ord 5.00 275.00  3.00 | The Co-operative Bank of Kenya Ltd Ord 1.00 20.25  0.25 | Athi River Mining Ord 5.00 180.00  -1.00 | B.O.C Kenya Ltd Ord 5.00 150.00 DNT | Bamburi Cement Ltd Ord 5.00 197.00  0.00 | British American Tobacco Kenya Ltd Ord 10.00  280.00  6.00 | Carbacid Investments Ltd Ord 5.00 145.00  -1.00 | Crown Berger Ltd 0rd 5.00 32.50  -1.50 | E.A.Cables Ltd Ord 0.50 19.15  -0.40 | E.A.Portland Cement Ltd Ord 5.00 100.00  -3.00 | East African Breweries Ltd Ord 2.00 181.00  1.00 | Eveready East Africa Ltd Ord.1.00 2.55  0.00 | KenGen Ltd Ord. 2.50 15.50  -0.05 | KenolKobil Ltd Ord 0.05  9.40  -0.10 | Kenya Power & Lighting Co Ltd Ord 2.50 22.50  0.50 | Mumias Sugar Co. Ltd Ord 2.00 8.10  -0.30 | Sameer Africa Ltd Ord 5.00 6.15  -0.05 | Total Kenya Ltd Ord 5.00 28.00  0.25 | Unga Group Ltd Ord 5.00 10.35  -0.10 | City Trust Ltd Ord 5.00 186.00 DNT | Eaagads Ltd Ord 1.25 50.00  -4.50 | Express Ltd Ord 5.00 7.50  -0.20 | Williamson Tea Kenya Ltd Ord 5.00  200.00  0.00 | Kapchorua Tea Co. Ltd Ord Ord 5.00 125.00 DNT | Kenya Orchards Ltd Ord 5.00 3.00 DNT | Limuru Tea Co. Ltd Ord 20.00 305.00 DNT | Kakuzi Ord.5.00  77.00  -3.00 | Rea Vipingo Plantations Ltd Ord 5.00 16.45  0.00 | Sasini Ltd Ord 1.00 11.55  0.00 | AccessKenya Group Ltd Ord. 1.00 10.00  0.00 | Car & General (K) Ltd Ord 5.00 49.50 DNT | CMC Holdings Ltd Ord 0.50 10.40  -0.10 | Hutchings Biemer Ltd Ord 5.00 20.25 DNT | Kenya Airways Ltd Ord 5.00 39.50  0.00 | Marshalls (E.A.) Ltd Ord 5.00 14.20 DNT | Nation Media Group Ord. 2.50 173.00  -1.00 | Safaricom Ltd Ord 0.05 4.20  0.05 | Scangroup Ltd Ord 1.00 60.00  -0.50 | Standard Group Ltd Ord 5.00 39.50 DNT | TPS Eastern Africa (Serena) Ltd Ord 1.00  66.50  0.00 | Uchumi Supermarket Ltd Ord 5.00 14.50 DNT | Barclays Bank Ltd Ord 2.00 69.50  0.50 | Centum Investment Co Ltd Ord 0.50  22.25  0.25 | CFC Stanbic Holdings Ltd ord.5.00 79.00  0.00 | Diamond Trust Bank Kenya Ltd Ord 4.00 146.00  -1.00 | Equity Bank Ltd Ord 0.50 28.75  0.25 | Housing Finance Co Ltd Ord 5.00 28.00  0.75 | Jubilee Holdings Ltd Ord 5.00 187.00  1.00 | Kenya Commercial Bank Ltd Ord 1.00 23.25  0.25 | Kenya Re-Insurance Corporation Ltd Ord 2.50 10.60  -0.10 | National Bank of Kenya Ltd Ord 5.00 47.00  0.50 | NIC Bank Ltd 0rd 5.00 52.00  0.50 | Olympia Capital Holdings ltd Ord 5.00 5.00  0.05 | Pan Africa Insurance Holdings Ltd 0rd 5.00 76.00  -3.50 | Standard Chartered Bank Ltd Ord 5.00 275.00  3.00 | The Co-operative Bank of Kenya Ltd Ord 1.00 20.25  0.25 | Athi River Mining Ord 5.00 180.00  -1.00 | B.O.C Kenya Ltd Ord 5.00 150.00 DNT | Bamburi Cement Ltd Ord 5.00 197.00  0.00 | British American Tobacco Kenya Ltd Ord 10.00  280.00  6.00 | Carbacid Investments Ltd Ord 5.00 145.00  -1.00 | Crown Berger Ltd 0rd 5.00 32.50  -1.50 | E.A.Cables Ltd Ord 0.50 19.15  -0.40 | E.A.Portland Cement Ltd Ord 5.00 100.00  -3.00 | East African Breweries Ltd Ord 2.00 181.00  1.00 | Eveready East Africa Ltd Ord.1.00 2.55  0.00 | KenGen Ltd Ord. 2.50 15.50  -0.05 | KenolKobil Ltd Ord 0.05  9.40  -0.10 | Kenya Power & Lighting Co Ltd Ord 2.50 22.50  0.50 | Mumias Sugar Co. Ltd Ord 2.00 8.10  -0.30 | Sameer Africa Ltd Ord 5.00 6.15  -0.05 | Total Kenya Ltd Ord 5.00 28.00  0.25 | Unga Group Ltd Ord 5.00 10.35  -0.10 | City Trust Ltd Ord 5.00 186.00 DNT | Eaagads Ltd Ord 1.25 50.00  -4.50 | Express Ltd Ord 5.00 7.50  -0.20 | Williamson Tea Kenya Ltd Ord 5.00  200.00  0.00 | Kapchorua Tea Co. Ltd Ord Ord 5.00 125.00 DNT | Kenya Orchards Ltd Ord 5.00 3.00 DNT | Limuru Tea Co. Ltd Ord 20.00 305.00 DNT 
Subscribe to Ratio Magazine
Check out our Business Diary
Find a job

 

East Africa's Hydrocarbons: Rising Interest, Growing Business Opportunities Print E-mail
Monday, 17 May 2010
Smaller exploration companies take a chance on East Africa’s under-explored areas, but Tullow’s successful exploration in Uganda is now drawing big oil firms to the region. Even if missing out on oil finds, Kenya still stands to benefit from the sector’s development.

Global Pacific and Partner’s East Africa Petroleum Week in Nairobi on 11 and 12 May 2010 was well attended: Tullow’s exploration success in Uganda has put East Africa, previously marginal territory, on the map and there is clearly rising interest in the region: One speaker it interests in Kenya commented that East Africa has ‘excellent hydrocarbons potential ... and we are keen to lock up acreage positions before the industry starts recognising the potential.’
 
Many of entrants are smaller firms taking a chance, and hoping for a success similar to Tullow’s. Amongst newest entrants are Canadian Centric Energy Corporation who have signed a production sharing contract for Block 10BA in February 2010. Several smaller players are exploring in the more challenging areas in the greater east and Horn of Africa region, the Ogaden and semi-autonomous Puntland, and also in Eritrea. But this is gradually changing.
 
Larger Players
After deciding to exercise their pre-emptive rights in the blocks held jointly with Heritage Oil, Tullow Oil have fended off Italian ENI’s attempts to muscle in on Heritage’s assets, and have recommended to the Ugandan government bringing in both CNOOC and Total with a 33.3% share each, giving much larger players a stake as Uganda moves on from exploration to production.
 
CNOOC already had a presence in East Africa through their interests in Kenya, albeit a lacklustre one: in 2006, CNOOC had signed production sharing agreements for six blocks in Kenya, but later returned four, keeping only the two most prospective ones. However, in his opening speech, Kenya’s Energy minister Kiraitu Murungi was hopeful that the ongoing drilling by CNOOC at Kenya’s Block 9 would show positive results shortly.
 
Kenya at the Centre
But whether or not Kenya finds commercial quantities of oil, the country is well placed to profit from the nascent hydrocarbons sector in the surrounding countries: Like Uganda, Southern Sudan is considering an export route through Kenya, and with a functional refinery – albeit in need of modernisation and expansion -, Kenya is a step ahead in the race with neighbours to build refining capacity . The regional market is simply not large enough to absorb the output of one, let alone several large refineries.
 
The entry of Egyptian Citadel Capital into the Rift Valley Railways (RVR) consortium has given the sluggish rehabialitation of the Uganda-Kenya railway link new momentum, driven by the need to get Uganda’s oil to global markets . Several additional railway and pipeline projects are in discussion, including those in the northern corridor, and a new standard-gauge railway line, but neither one is easy, or quick to complete: As Rob Shepherd, Dominion Petroleum’s Finance Director, observed jokingly: ‘the easy part is finding the oil, the difficult part is getting it to the coast’.
 
Surprisingly, neither Kiraitu Murungi nor Mwendia Nyaga, Managing Director of the National Oil Corporation of Kenya (NOCK), made any mention of the many infrastructure and oil infrastructure plans that the government had been promoting. In particular the Lamu port/Northern Corridor project – designed to include a merchant refinery, railway line to Southern Sudan and Ethiopia, and a pipeline – would have been relevant to the plans of companies exploring in the Ogaden, and one of the presenters stated that if they found commercial quantities of oil, either Djibouti or, if then constructed, Lamu would be their export route: the venture is on the exploration companies’ radar screen.
 
For now, Mombasa seaport and the existing infrastructure will play a key role. And with its well connected airport and hotel and conferencing facilities, and skilled professionals, Kenya is, in principle, well placed to expand its role as a service and transhipment centre for its neighbours.
 
And both for its own rising demand and for its neighbours, Kenya anticipates a number of petroleum-related investments that will offer opportunities to the private sector:
  • Construction of a second jetty at Mombasa port. Currently, the existing jetty handles both refined and crude product and is overloaded.
  • The ongoing modernisation of the Mombasa refinery in which Indian Essar acquired 51% after a detour when the refinery stake had been reallocated to the Libyans, and then re-reallocated to the Indians.
  • More oil storage facilities: The National Oil Company of Kenya (NOCK) is considering increasing storage space for strategic reserves, and several parts of the country have no storage at all, as Nyaga pointed out.
  • Kenya and Uganda are also currently reconsidering the ongoing extension of the Kenya-Uganda railway to determine if and how it might be reverse-engineered to accommodate the export of oil from Uganda.
 
Perspectives
Much of the current exploration – and, in Uganda, nascent production – is onshore, and the resultant need to build cross-border infrastructure and other facilities creates new opportunities for Kenya, and has the potential to drive on the already relatively successful regional integration within the East African Community (EAC). To date, however, a regional agreement on which new pipelines and railways projects to pursue has not yet crystallised. And apart from economic considerations, political ones may also come into play:
 
Kenya is, by its geographical location and existing infrastructure, will necessarily be a key transhipment point, which throws a spotlight on Kenya’s political risk: Uganda and Rwanda had been hit by supply shortages in early 2008 when the post-election violence affected both road and rail transports. For Uganda, the rehabilitation of the existing, narrow-gauge railway would be the easiest and quickest solution available in the short term – but would Kenya’s 2012 elections carry the risk of renewed disturbances?



Share this article with others:
Digg!Reddit!Del.icio.us!Facebook!Slashdot!Netscape!Technorati!StumbleUpon!Newsvine!Furl!Yahoo!Ma.gnolia!Free social bookmarking plugins and extensions for Joomla! websites!
Comments (0)Add Comment

Write comment

busy
 
 
Arqaam Capital
Global Interlink Travel Services Ltd.
African is Cool online investor relations
Follow RatioMagazine on Twitter

Sponsored Links

News Stream