Kenya says oil explorer interest returning

NAIROBI (Reuters) - Oil explorers have started to return to Kenya after a break occasioned by the financial crisis but activities will pick up after the drilling of a Chinese well in the north, the Kenyan energy minister said on Monday.

China National Offshore Oil Company (CNOOC) is drilling the east African nation's 32nd well in the Anza Basin of Isiolo.

Although no oil has been struck yet and CNOOC's well is expected to be completed next month, results of past drillings have been encouraging and explorer interest peaked in 2008 on the back of record high price of crude.

Applications for new exploration licenses in Kenya fell off after the global financial crisis set in later that year, triggering a collapse of crude price.

"Interest is rising again but I think the international oil companies are also watching what we are doing at Isiolo, if there is a discovery of either oil or gas, there will be another rush," Kiraitu Murungi told reporters.

"But everybody now is watching and we shall know by April where we are on that."

Oil deposits were found in Uganda in 2006 and Tanzania has proven natural gas reserves, supporting the argument that Kenya too could be sitting on oil or gas, as the three nations share the same geological profile.

Australia's Woodside Energy is among several international firms that have been active in Kenya's search for oil and gas, while Britain's Tullow Oil Plc exercised a pre-emption right to buy some Ugandan assets of Heritage Oil.

Murungi said India's Essar, which took a stake in Kenya's refinery last year was studying various proposals on the upgrade of the facility which the industry says is too old, thus causing inefficiencies in the sector.