Kenya deal with S. Sudan may be revisited

Kenya is likely to enter into fresh negotiations over ownership of the proposed pipeline connecting oil fields in South Sudan and the Lamu port.

This comes in the wake of oil discovery in Turkana County. (READ: We have found oil, says Kibaki)

Speaking to the Nation over the phone, Mr Paul Ngatia, senior deputy secretary in the Energy ministry, said the discovery could affect a memorandum of understanding signed earlier between Kenya and South Sudan.

He said this calls for talks between the two countries on how to deal with the new development.

“The memorandum was a product of discussions between the two governments. In light of the new development, other issues will definitely come up that will need to be discussed,” said Mr Ngatia.

However, he warned, it was too early to state what direction the agreement will take as that will depend how both countries will handle the issues.

About two months ago, Kenya signed an agreement with South Sudan to set up a 2,240-kilometre oil pipeline, which the latter hoped would be the gateway to the sea instead of going through Sudan.

The row stalled oil exports from South Sudan’s oil fields through Port Sudan.

The agreement will see South Sudan finance construction of the pipeline, which would definitely give it the right of ownership while Kenya maintained the “right of way”.

The pipeline, which is part of the Sh2 trillion Lamu port project, whose construction was commissioned earlier this month, is expected to generate income from transit fees charged on exports.

But barely two days after British firm Tullow Oil announced that it had struck oil at Kodekode village in Nakukulas location in Turkana East District, questions are being asked over the validity of such an agreement entered into before the oil discovery in Kenya.

Lucrative business

Experts have called for a well-thought-out mechanism of handling the various interests likely to emerge as eyes remain cast on the lucrative business.

“With the confirmed oil find in Turkana County, there is a possibility of a consortium of investors with oil interests in South Sudan, Kenya and possibly Uganda, forming a joint venture ownership arrangement to develop a transnational pipeline terminating at Lamu,” said Petroleum Focus Limited director George Wachira.