Kenya plans to unfreeze issuing of permits for exploration blocks

A policy delaying issuance of licences for oil and gas exploration blocks may be reversed pending a new law.

This comes as more international companies apply for permits to search for the two fuels.

The Ministry of Energy and Petroleum has put on hold licensing of 15 new blocks since last year as it awaits a review of the law on petroleum exploration. It was hoped a review of the law would “secure more revenue for the government” from the licensing of the blocks.

“It is a debate that has opened. We have many applications that have piled up. It is important to make sure that there is ability to make a decision,” said Energy Cabinet Secretary Davis Chirchir.

He spoke in Nairobi yesterday at the sidelines of a convention organised by consultancy firm Oil & Energy Services.

Some blocks that are yet to be issued to exploration firms have been carved out from those that were surrendered by companies such as Tullow, Anadarko, Apache and Pancontinental.

An energy and petroleum draft Bill prepared by the Ministry of Energy is yet to be tabled in parliament. Its intention is to review contentious clauses in the current law and incorporate provisions of the Constitution in local oil and gas finds.

CHANGE SHARING STRUCTURE

The proposed legislation is expected to change the oil revenue sharing structure to include counties and local peoples.

Consideration of new revenue sharing comes out of recommendations made by a team of International Monetary Fund experts who visited the country last year to review petroleum exploration and mining contracts.

The team’s input, according to Mr Chirchir, will enable the ministry to draft new contracts that ensure the government earns more from exploitation of oil.

However, this will not affect existing contracts between the government and oil exploration firms but will apply to future issuance of blocks.

The government will also track exploration costs by licensed companies to ensure that firms only recover valid expenses, in keeping with the conditions of the licences.

Mr Chirchir said the draft petroleum law creates the office of a regulator, work which is currently outside the scope of the energy regulatory commission.

This comes as the search begins for a consultant to supervise implementation of the proposed crude oil pipeline between Hoima in Uganda and Lamu through Lokichar in Kenya.