Kenya’s energy minister on Thursday announced the suspension of the East African nation’s plan to pump crude oil in a drought-ravaged northern province by British-Canadian firm Tullow Oil.
Speaking at a press conference in the country’s capital Nairobi, the country’s energy minister Charles Keter said the Early Oil Pilot Scheme, that had been slated to start this month, had been moved to September pending approval of an energy bill.
“After consultation with stakeholders in the county, we will do it by the end of the year,” Keter told journalists on Thursday.
The Early Oil Pilot Scheme is a government project that was meant to kickstart the exploitation and marketing of Kenya’s oil at small scale to test the market. It was expected to run for two years from mid-2017.
The energy bill is currently before Kenya’s Senate, which has been disbanded in preparation for the general elections slated for the 8th of August, meaning that any legislation can only be passed after a new Senate is constituted after the elections.
When passed, the new law will give guidance on how the revenue from the oil proceeds will be shared between the county and the national government.
Last year, Kenya’s president Uhuru Kenyatta had directed Tullow Oil to expedite oil exploration in the country’s arid and often volatile region.
At the time, Tullow chief operating officer Paul McDade said his company had made good progress and would be ready to start oil exportation in June 2017 at an initial 2,000 barrels per day from five existing wells and that the oil company had already stored more than 70,000 barrels of oil in Lokichar, an outpost in Turkana ahead of the early export plan.
Kenya’s oil fields are in the country’s remote northern region of Turkana. The area was badly affected by this year’s drought, which gave rise to conflict between neighbouring communities over pasture and water. More recently, raids and counter raids between the Turkana and the Pokot, two of the dominant tribes in the region has led to the loss of lives and destruction of property.
Observers have raised concerns that an oil boom in the unstable region could exacerbate tensions.
Apart from the sporadic insecurity in the area, announcement of the commercial production of crude in the region pitted Kenya’s central government against Turkana’s local leadership over the revenue share from the proceeds of petrol.
President Kenyatta and Turkana governor Josphat Nanok have on at least one occasion had verbal exchanges over revenue sharing proposals.
Nanok, and most Turkana leaders, are pushing for at least 10% of oil revenues to be withheld by the county while the national government is pushing for a 5% ceiling.
The postponement of exploration might vindicate some of Kenya’s neighbours who pulled out of a multi-country oil infrastructure project that would have seen the creation of pipelines and road networks between Kenya, Uganda, Tanzania and South Sudan.
Just last month, Uganda officially pulled out of the ambitious Eastern Africa project citing insecurity and instead opted to piggy back on Tanzania’s already under construction pipeline to transport its own crude out of its wells.
Construction of Kenya’s oil infrastructure network of roads and a pipeline that would move the crude to the port city of Mombasa some 900 kilometres south of the oil fields has been halted by the contractors over security concerns.
But at Thursday’s press conference, the energy minister dismissed insecurity as a factor for its decision to suspend oil production.
“Insecurity has nothing to do with what Tullow Oil has been doing in Turkana… insecurity happens everywhere. There have been incidences of insecurity in the area even before drilling started,” he said.
Kenya’s oil discovery in 2012 was hailed as a ‘major breakthrough’ by the then president Mwai Kibaki who said the county’s economic programs, which had and continue to be supported by trade, tourism and agriculture would be significantly boosted by oil revenues.