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September 24, 2018

Transporting Kenya’s black gold

A view of Ngamia 1 oil rig in Lokichar,Turkana on April 5 2012. /FILE
A view of Ngamia 1 oil rig in Lokichar,Turkana on April 5 2012. /FILE

Back in 2012, Tullow, a UK oil and gas company, struck oil in Kenya’s Lokichar basin. This was followed by numerous media reports highlighting the natural wealth that our dear nation is endowed with. Further, expectations that Kenya would be an oil rich country in the near future were heightened.

Five years down the line, and with 750 million barrels of crude oil considered commercially viable, Kenya’s dream to be a pioneering oil producer in the East African frontier region is at last almost achieved. Although set back after set back has slowed our initial momentum, we have made considerable progress. From the drop in oil prices between 2014 and 2015, which severely hampered exploration activities in the Turkana region, delays in construction of the new Lamu Port and proposed refinery, Uganda pulling out of the Kenya – Uganda pipeline deal in favour of a deal with Tanzania, as well as the stalling of the proposed early oil pilot scheme, have all been challenges to Kenya’s oil developmental plan.

However, despite these numerous setbacks, the Government has not given up on the dream. Kenya is truly resilient. Earlier this week, in a firm stand following the Government of Uganda pulling out of the initial oil pipeline deal earlier this year, the Government of Kenya, together with three development partners carrying a stake in the Lokichar basin, signed a Joint Development Study Agreement. This agreement serves to set the foundation for the proposed oil pipeline that would evacuate crude oil from the Lokichar basin to the Lamu Port. On the back of this agreement, the Ministry of Energy will start inviting investor bids in relation to the pipeline’s design, as well as for the conduct of environmental social impact assessment studies.

While the above is indeed progress in the right direction, we remain cognizant of the challenges experienced back in 2012. The road to being a profitable oil producing region is a tough one – as evidenced by the seemingly never-ending obstacles over the past five years. As such, rather than placing our focus on the end result, that is the expected petro-dollars, the priority focus is on ensuring that effective measures to take advantage of the resultant petro-dollars are in place. The legislative, regulatory and institutional frameworks required to successfully be an oil producing nation, not another victim of the resource curse, must be given precedence over the financial benefits of the resource.

While it may be argued that five years is a long time to wait to see benefits arising as a result of the precious resource – we must call for continued patience. The journey may be long but the end result is well worth the wait.

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