By Mohammed Jetutu, Cairo
Apache Corp. is leaving Kenya, following the sale of one third of its assets in Egypt. In just about a month after it announced a $3.1 billion sale of 33 %of its Egyptian assets, the American super-independent informed the government of Kenya about its decision to relinquish its 50% stake and operatorship of Kenya’s Block 8, in deep-water Lamu Basin.
The sale of the Egyptian asset to Sinopec was announced on August 29, 2013. The decision to get out of Kenya was communicated to the country’s authorities on September 27, 2013. The timing-one month from one another-would suggest that the company had a strategic decision to farm down in Africa. Egypt and Kenya, after all, are the only African countries in which it operates. The story, however, is a little more complicated.
Apache has been exceptionally profitable in Egypt, with 20% of its entire production and 10% of its overall estimated proved reserves in that country, in which it had 1,011 net producing oil and gas wells as of December 2012. The company raked in $4.5Billion production revenue in the North African country in 2012, compared with the $6.3Billion it made in the United States in the same year, even though its American production doubled the Egyptian output. The decision to sell must be quite more comprehensive than a simple profit and loss narrative.
In Kenya, on the contrary, Apache had been looking to get out since March 2013, seven months after it finalized the drilling of Mbawa South-1, which turned out to be a discovery, but was deemed sub commercial by the operator.
The pull of America is a strong factor in the decision to reduce the foot print in Africa. “United States remains the world’s highest demand market for hydrocarbon products”, the company has remarked. “While the domestic oil and gas industry is considered mature, technology has revitalized the industry, reversing a multi-decade decline in domestic oil production. Apache is at the forefront of this resurgence”. Interpretation: This large sized, American born operator wants to spend more time at home.