A BG Group-led consortium is in exclusive talks for the award of production sharing contracts on two blocks off Kenya, according to partner Pancontinental Oil & Gas.

The company said the group has been offered licences for blocks L10A and L10B, with negotiations for the PSCs with the Kenyan Ministry of Energy set to take place over the coming weeks.

A fast-track seismic and drilling programme has been proposed by the consortium, which comprises BG Group with partners Pancontinental, Premier Oil Investments and Cove Energy.

The proposed work programme includes 2D and 3D seismic surveys in the first phase with drilling in later phases.

If the consortium gets the contract, BG will hold a 40% stake in Block L10A, with Cove on 25% , Premier on 20% and Pancontinental on 15%.

In the second licence, BG would hold a 45% interest and Premier 25%, with Cove and Pancontinental each on 15%.

“Assuming the award is successful, this is clearly positive news for Premier, as it looks to broaden its exploration portfolio beyond 2012,” analyst Richard Rose of Oriel Securities was quoted as saying by Reuters.

Blocks L10A and L10B cover 4962 square kilometres and 5585 square kilometres, respectively, with water depths of 200 to 1900 metres, which is within the reach of modern drilling and development technology.

The new areas, if awarded, would more than double Pancontinental’s gross acreage position off Kenya, where it also has holdings in blocks L6 and L8, the company said.

Kenya currently has no proven oil reserves, but interest in the hydrocarbon potential of the East African region has shot up in recent years after offshore gas discoveries in Tanzania and Mozambique and billions of barrels of oil in Uganda.

BG recently said it was working on a third well off the coast of Tanzania, where it made two gas discoveries in 2010, and analysts have speculated the finds could open up a new hydrocarbon basin in East Africa and warrant the building of a liquefied natural gas hub, Reuters reported.