Oil has been found in Kenya by Tullow Oil, an Anglo-Irish firm that also struck oil in neighboring Uganda.
Kenyan President Mwai Kibaki announced the landmark discovery today, but said the successful drilling of oil is still years away, the Daily Nation reported.
Energy Minister Kiraitu Murungi, who held a glass bottle of "light waxy crude oil" at a news conference, said that Kenya's oil deposits, which are in the Turkana region in the country's northwest, could be bigger than Uganda's, the newspaper reported.
"This is the first time Kenya has made such a discovery and it is very good news for our country," President Kibaki said.
"It is however the beginning of a long journey to make our country an oil producer, which typically takes in excess of three years. We shall be giving the nation more information as the oil exploration process continues," he explained.
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Kibaki said Tullow will drill more wells to check the commercial viability of the oil discovery.
Reuters said shares in Tullow jumped 2.5 percent in London after the announcement of its oil find in Kenya.
"This is an excellent start to our major exploration campaign in the East African rift basins of Kenya and Ethiopia," said Angus McCoss, the company's exploration director, according to the BBC.
"To make a good oil discovery in our first well is beyond our expectations and bodes well for the material program ahead of us," he added.
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