Dominion agrees terms for Kenya block

Kenya’s government has awarded Dominion Petroleum operatorship of a deepwater block in the Lamu basin.

Offshore staff

LONDON -- Kenya’s government has awarded Dominion Petroleum operatorship of a deepwater block in the Lamu basin.

Negotiations were completed last week to define terms for the L9 block, and Dominion is due to sign a production sharing contract next month in Nairobi with Kenya’s Ministry of Energy.

Dominion will have a 60% interest in L9, which it believes has geological similarities to block 7 offshore Tanzania, which the company also operates.

Due a high level of interest by potential partners in block 7, Dominion may seek to include L9 in a farm-out process and coordinate exploration activities between the two blocks.

To date, one well has been drilled in L9 in 1979. Simba-1 encountered gas shows in the Tertiary and Upper Cretaceous. Results of that well indicated a working hydrocarbon system in the Lamu basin, and offshore oil seeps have been identified north of L9.

The PSC’s initial exploration period lasts for two years. The gross minimum work commitment of $6.15 million includes acquisition of 500 sq km (193 sq mi) of 3D seismic data.

After the initial period, there is an option to relinquish the PSC or commit to another two- year exploration period, with the obligation to drill one well.

03/21/2011

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