Menu

Maersk Oil, the oil and gas arm of Danish shipping giant A.P. Moller-Maersk Group, has agreed to buy into five oil blocks – three in Kenya and two in Ethiopia – for a fee that could rise to $845 million.

In a statement posted on its website, Maersk Oil said it would acquire the stakes by buying half of the interests owned by Canada-based Africa Oil Corporation in all five oil blocks. The exploration areas in question cover the Turkana region of northern Kenya and southern Ethiopia.

According to the deal, Maersk Oil will make an upfront payment of $365 million and future contingent payment of up to $480 million depending on size of the resource and the timetable for first oil.

Maersk Oil will acquire a 25 percent interest in exploration licenses 10BB, 10BA and 13T in Kenya, in addition to 25 percent in Rift Basin in Ethiopia and 15 percent in South Omo in Ethiopia.

“Maersk Oil is committed to pursuing profitable growth by focusing on expanding within our core geographies,” Jakob Thomasen, Maersk Oil CEO, said. “In addition we are rebuilding the exploration business with new acreage positions and pre-development discoveries to balance the risk profile in our portfolio,” Thomasen said.

As low oil prices continue to linger, Maersk Oil has been investing in low cost exploration projects to boost its fledgling reserves. The oil blocks cover an area of about 100,000 square kilometres and include eight recent oil discoveries, with ongoing exploration and appraisal activities. Tullow Oil operates four of the oil blocks, with 50 percent stake, while Africa Oil Corporation operates the remaining, with 25 percent stake, the statement said.
“As part of the Maersk Group, we are in a position, where we can take advantage of opportunities arising in current market conditions,” Thomasen said. “This is an important driver of long term value.”

Maersk Oil produces about 550,000 barrels of oil per day from oil blocks in Denmark, the United Kingdom, Qatar, Kazakhstan, The US Gulf of Mexico, Algeria, and Brazil. The company also has ongoing exploration activities in Angola, Norway, Greenland and Iraq.

Chibuike Oguh is Financial Nigeria's Frontier Markets Analyst