By Andre Michael Eggelletion
Gippsland Offshore, the same oil exploration firm that found oil in Jamaica in 2009, has now completed negotiations with the Government of Kenya to enter the next exploration term for its L-6 permit. The Kenyan government began the licensing process for petroleum exploration in June 2009. Gippsland Offshore and its partner in the L-6 venture, Pancontinental Oil and Gas, share a 60 percent/40 percent stake respectively. Pancontinental Oil & Gas (ASX:PCL) also has a 25 percent interest in a license to explore the L-8 Mbawa area in the offshore waters of Kenya. Pancontinental has determined the L-8 area exceeds the potential for 1 billion barrels of recoverable oil, or 1 trillion cubic feet of recoverable gas. Future estimates are expected to be revised up or down to some extent. New 3D mapping began three months ago, and are near to finding a drilling site. With water depth in the L-8 area only about 800 meters, it’s easily within the range of modern drilling and production equipment.
The L-6 and the L-8 areas of Kenya, covering the offshore Lamu and Mbawa Basins repsectively parallel the history of petro-geological profiles in Jamaica. Indeed, a great deal of East Africa has been poorly explored historically. However, new technologies have allowed better and easier exploration. In Kenya, a total of seven prospects have been mapped, both on and off-shore. They are highly prospective and are supported by oil and gas shows in wells and seeps in the region. The first petro-geological profiles of Jamaican territories were conducted in 1955 and 1973, and according to the Geological Society of Trinidad and Tobago, again in 1981, and 1983. What did they conclude? According to the Journal of Petroleum Geology, eleven wells were drilled in Jamaican territory over a 27–year period commencing in 1955: all were abandoned as dry. These combined results would suggest that conditions did not favor the generation, accumulation and preservation of petroleum in Jamaica. Twenty six years later in 2009, another profile was conducted, and this time, they found oil. According to Oil Voice: Gippsland Offshore Petroleum is a 50% equity partner in the Jamaica Joint Venture (JJV) that has 5 exploration permits over 14,500km2 of frontier exploration acreage offshore Jamaica over the majority of the Walton Basin. Of the 11 wells that had been drilled in and around the basin, 10 of them had oil. Seven prospects have been mapped with upside potential for greater than 2 billion barrels of recoverable oil.
Both Jamaica and Kenya offer high petroleum prospectivity, in that they import 100 percent of their oil. They also offer attractive government commercial terms, and Kenya particularly, offers proximity to the growing markets in East Africa and India. Both these areas of the world now form a high quality component of Gippsland Offshore’s ongoing exploration portfolio. That’s great news for Gippsland and its shareholders. But what about the owners of these newly discovered, and highly lucrative natural resources?
I can only imagine what this discovery will mean to Kenya and Jamaica. The discovery of this oil should mean an end to their sovereign debt burdens, but given the history of how things of this nature are usually resolved; I’m not so sure that it will. The reality of the oil situation in the Caribbean is probably much worse than some may inductively consider. I wrote about this in my book, “Where the Right Went Wrong on National Security (and the Left too).” The way it has historically worked is that every time poor countries have been found to poses such valuable natural resources, control is lost due to privatization. When the leaders of these countries do not accept losing the tremendous prosperity offered by their resources, and opt for their nationalization, a coup or assassination usually follows. Instead of these discoveries improving the quality of life for people sitting on these resources in the less-developed world, historically they are either sold-out by their leaders or robbed by pirate corporations from powerful nations. They usually end up enslaved and being forced to live in increased pollution, poverty, and dislocation. I hope it’s different this time.