Slippery road to implementing Kenya's oil exportation plan

Political interests, infighting within the Energy ministry and business interests may have caused the suspension of the plan to transport crude oil from Lokichar in Turkana to the Port of Mombasa by road.

While the official script during the last-minute suspension of the scheme was that the Petroleum Bill, which specifies revenue sharing had not been passed, various timeline inconsistencies and failure to make adequate preparedness for the trucking brought down a flagship plan.

Insiders who spoke to the Nation say while one faction had advised on the freeze of the Early Oil Pilot Scheme until Kenya had a pipeline, another faction keen on taking political credit and cutting business deals pushed with the plan. One said the infighting in the ministry has left Tullow Oil, the British multinational involved in exploration in Turkana, in the middle with most decisions forced on the company, including the June deadline to use trucks to transport oil despite questions on the plan.

NOT POLITICIANS

Turkana Governor Josephat Nanok said the local politicians were not to blame for the failed plan as the national government had failed to implement the scheme.

“The national government is unprepared and they know it, road construction is still on-going, the Kainuk Bridge has not even started, insecurity remains unchecked and oil revenue dispute with Turkana community has not been resolved. Tell them to stop looking for scapegoats. They are responsible for the failure of the early oil,” Mr Nanok wrote in a text message reply to our queries.

Before Thursday’s announcement by Energy Cabinet Secretary Charles Keter that the scheme had been suspended, the Nation had sent questions to Tullow Oil regarding preparedness for the plan. The responses were issued only after Mr Keter’s statement.

“Tullow is technically ready. Transporters have been contracted; 50 trucks and 30 tanktainers have been mobilised,” the explorer wrote back.

ROAD CONDITION

Tullow could not say whether it had confidence in the condition of the road where its trucks were meant to pass with the loads of crude or whether it preferred the earlier plan to use the railway transport.

The explorer had threatened to suspend operations in Turkana over security concerns, a move that would jeopardise the whole plan to have Kenya join the league of oil exporters.

Tullow is said to have found itself right between conflicting community interests, local and national politics and heavy business power plays that have left it with little option in the partnership it had entered with the government to carry out the early oil pilot scheme.

Petroleum Permanent Secretary Andrew Kamau, however, dismissed the allegations of unpreparedness saying the government only felt the need to include the local community through the Bill hence the suspension of the plan.

'PETROLEUM BILL'

“Even as a government, we did not want to proceed without bringing the people with us. That is why we need to wait for the Petroleum Bill. Otherwise we were fully prepared,” Mr Kamau said. Asked whether the plan was brought down by politics, the PS said “even the Petroleum Bill is politics”.

The plan to truck the 2,000 barrels of crude per day from Lokichar for storage in Mombasa before onward shipping for export starting last month was also said to have been hard hit by lapse of timelines.

After resorting to the 296km road linking the oil fields in Lokichar, Turkana to Kitale town amidst security challenges, the state of preparedness by the end of June when the trucking was meant to begin is said to have been wanting.

NOT READY

Another source said that the storage tanks in Mombasa where the crude was meant to be held before loading into the ship were not ready. While the tanks needed to have been upgraded for heating to hold the waxy crude, procurement for its refurbishment dragged as plans were made to have Kenya Pipeline Company take over the facilities at the Kenya Petroleum Refineries Limited.

Planners were said to have been overly ambitious that the Sh1.5 billion upgrade on the storage facilities would be done in nine months leading  to a shoddy upgrade plan that was going to be a recipe for trouble had the plan been executed last week.

The plan has now been thrown into uncertainty since it will now await the next Parliament to constitute committees whose membership may not be known and whose composition may throw the country back to the drawing board.