Kenya – Oil Production Begins

As it becomes the first in East Africa to export oil, the nations vows to share the benefits of the resource. 

Kenya’s ambition to become a global oil producer was advanced on June 3rd following the flagging off of the first barrels of the resource from the Turkana fields, Daily Nation reported.

President Uhuru Kenyatta led a host of local leaders to celebrate the feat that sees the country join Uganda as the only two oil-producing countries in East Africa.

In a historic occasion held at Ngamia 8 oil fields, from which the oil was drilled, the President flagged off four lorries ferrying the lucrative resource to the coastal town of Mombasa.

The crude oil is being transported in an experimental programme dubbed the Early Oil Pilot Scheme. It will be kept in Mombasa as the country looks for viable international markets.

The producing company, Tullow Oil, targets trucking at least 2,000 barrels a day under the scheme. It already has 70,000 barrels stored in tanks in the fields.

Kenya will look to avoid the “resource curse” of so many other African nations, President Kenyatta said, according to oilprice.comadding that he hoped that oil would become a major contributor to the country’s economy.

kenya oil
“We now have an understanding that can put Kenya on the map of oil exporting countries.” Image: EastAfrican

“The benefits from this oil will be shared and nobody will be left behind,” stressed Deputy President William Ruto. “Every member of this community will be on board.”

Turkana Governor Josphat Nanok meanwhile emphasised the importance of putting in place a comprehensive law that would cover how the money allocated to the county and the host community would be spent.

It has taken close to seven years to get the first barrels out of the fields. The discovery of oil in March 2012 has been a point of conflict between the residents and Tullow Oil.

The Early Oil Pilot Scheme, which will be followed by the Full Field Development phase, will enable Kenya to establish itself as an exporter and provide information for future exploration and development.

As the sector blossoms, the scheme will incentivise better road infrastructure and stimulate electricity connectivity to more households in the region, Daily Nation noted.

President Kenyatta announced that the production of oil from the Turkana oilfields would start after an agreement was reached in May on the sharing of revenue, according to PANA. The President’s office said the oil revenue will be shared on the basis of 75% to the national government, 20% to the county government and 5% to the local community.

“We now have an understanding that can put Kenya on the map of oil exporting countries. We will intensify our exploration efforts not just in Turkana but in the rest of the country now that we have a legal instrument that can help guide how oil and gas will be handled in our Republic,” said Kenyatta.

Construction of the crude oil pipeline between Turkana and Lamu is finally set start by June 2019, Kenya’s The Standard reported.

While the Early Oil Pilot Scheme may not give Turkana residents the much-anticipated wealth, the same newspaper said, it could make life more bearable for residents while they wait for the promised petro-dollars in 2022. The early oil project is expected to result in a much-needed improvements in security, water, grid electricity and roads.

economic banner

Find out more in the Africa Research Bulletin:

KENYA: External Funding Sought
Economic, Financial and Technical Series
Vol. 55, Issue 4

OIL AND GAS
Economic, Financial and Technical
Vol. 55, Issue 4

NIGERIA: Beyond Oil
Economic, Financial and Technical Series
Vol. 55, Issue 3

Subscribe to ARB today.