One of East Africa’s economic giants, Kenya on Monday, August 26, exported its first crude oil into the global market. This major milestone is expected to position the country as a net oil exporter.
The oil tanker-Mv Celsius Riga flagged off by Kenya’s President Uhuru Kenyatta at the Kipevu Oil Terminal in Mombasa will deliver 200,000 barrels of crude oil to Malaysia. Tullow Oil, with its partners and the government, picked trading company ChemChina UK Ltd as the buyer of Kenya’s first shipments. Although the country is years away from commercial, the discovery of oil has heightened expectations that citizens, especially those living adjacent to the deposits, will benefit.
“The government will ensure that the local communities benefit from the oil,” the President said, “I urge all those in charge to avoid any misuse of the resource that would deny others its benefit.”
Looking at the issues plaguing oil-producing countries like Nigeria, it is pertinent that Kenya has to learn from them and ensure that it doesn’t make the same mistake.
In March, Kenya’s president signed into law a long-awaited petroleum bill. The bill regulates oil exploration and production and outlines how revenues will be shared between the government, local communities and companies. The law allocates 20 percent to local government, 5 percent to the communities living where oil was found and 75 percent to the central government. Although an earlier draft gave 10 percent to the communities. The law also says parliament will review the percentages within 10 years. The law is required for large-scale oil production but was delayed by tussles between layers of government and residents of Turkana, the impoverished northern region where the oil deposits were found.
The Kenyan government plans to construct a pipeline between Turkana and Lamu Port to ease the transportation of the commodity. This is under the US$24.5 billion Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor Programme, eastern Africa’s largest and most ambitious infrastructure project. It is also on track with its 2020 plan for a pipeline connecting Lokichar-Lamu, according to Kenya’s Petroleum Cabinet Secretary John Munyes.
The oil reserves in the Lokichar basin were discovered by Tullow and its partner Africa Oil in 2012. Lokichar is found in Turkana County, one of Kenya’s 47 counties in the northern part of the country.
Since then, over 40 exploration wells have been drilled in South Lokichar basin by Tullow and its partners with over half a billion barrels of recoverable oil identified. US$2 billion has been spent on an appraisal.
A number of other discoveries have been made in the region and the exploring partners have developed a number of blocs with three currently at an advanced stage. The blocs are named Amosing, Ngamia and Twiga. According to Tullow, the Amosing and Ngamia fields have estimated contingent resources of about 560 million barrels, with plateau production potentially reaching 100,000 barrels per day in 2022.