Exploration firm Tullow Oil increased its estimate of resources in Kenya and announced a new discovery, moving closer to commercial production of oil in the east African country.

Africa-focused Tullow said it had increased its resource estimate for the South Lokichar basin in Kenya after flow tests at its Ngamia and Twiga South wells and a new discovery at the Etuko-1 well.

The discoveries in Kenya, along with oil struck in Uganda and gas finds offshore Tanzania and Mozambique, underlines east Africa's potential to become a major oil and gas producing region in the next five years.

Tullow said it sees a flow rate potential of 5,000 barrels a day based on Ngamia-1 and Twiga-South-1.

It estimates that there are 250 million barrels of oil in place - a forecast it said could increase further after appraisal.

Tullow is focused on exploration, but makes money producing oil in Ghana. Last year it raised $2.9 billion for more exploration by selling part of its Uganda franchise to Total and China's CNOOC, bringing top global oil companies into east African oil for the first time.

Terms for the commercialisation of the Ugandan oil, which Tullow has said is worth $50 billion to the country, have yet to be agreed.

Tullow said talks were continuing with the government there, and Ian Springett, finance director, said the company expects to see a memorandum of understanding signed in weeks.

He also said the positive well test results in Kenya had "crystallised the thinking of all parties" around a pipeline route that would see Ugandan production exported via Kenya - linking up with Kenya's own supplies and probably reaching the coast between ports Mombasa and Lamu.

He said other pipeline options, including a route via Tanzania further south, were still on the table.

Uganda is aiming for commercial output of oil by 2016 and estimates its crude reserves at 3.5 billion barrels. Wrangling over taxes and over the size of a refinery to process some of the crude have stalled commercialisation.

In April it was agreed that the refinery would process 30,000 barrels a day. Uganda currently transports all of its fuel - imported primarily through the Kenyan port of Mombasa - in road tankers.