Kenya+Petroleum

=Kenya's Vast Potential Of More Than 300 Million Barrels Of Crude Oil, More Than The DRC and Uganda, Make It Highly Likely Chinese Investors Will Invest In Kenyan Oil Over The Next Five Years=

Executive Summary:
Chinese petroleum investors are highly likely to not ignore Kenya's potential to outstrip the DRC and Uganda in oil production in the next five years. CNOOC left Kenya for Uganda in December 2010 to head for Uganda because of lack of discoveries despite having exclusive rights to six out of 11 oil exploration blocks, including the Isiolo and Mandera areas. Despite CNOOC leaving Kenya for Uganda, Kenya's oil discovery being much more recent presents many more opportunities for Chinese investors over the next five years.

===Discussion:=== Kenya and CNOOC explored for valuable natural resources from 2004 to 2010, leaving its exclusive rights to six of 11 oil exploration blocks in Kenya for Uganda after spending USD 26 million in exploration projects.Kenya's discovery in 2011, expected to surge past Uganda's and the DRC's oil production with at least 300 million barrels of crude oil in the oil field, currently have no Chinese investments; Tullow, Africa Oil, Taipan Resources, New African Global Energy, and Premier Oil Investments have the current investments in Kenya. According to GlobalData, Kenya oil production can begin as early as 2016, expecting USD 300 million per year for the next 30 years. The only setback thus far for Kenyan oil companies are rebels in the area, causing Tullow and Africa Oil to suspend oil activities indefinitely until the situation is resolved. Chinese investors would act be less likely to invest if the rebels still pose a serious threat to the region.

Other oil investments by Chinese companies China Petroleum Technology and Development Corporation and the China Railway Number 2 Engineering Group Ltd. have a deal to construct of an offshore refinery in Mombasa and upgrading oil pipelines. ICBC is also loaning USD 80 million to Triumph Kenya for an 83MW heavy fuel oil plant.

**Analytic Confidence: **
Analytic confidence for this assessment is moderate. Source reliability is medium. There is no conflict between sources. The analyst had low expertise, worked alone but collaborated with a team, and did not use structured analytic methods. The subject is moderately complex and the deadline was moderately difficult to meet.


 * Analyst**: David Bott