When oil was discovered in Turkana in March 2012, Kenya had hoped to generate the much-needed petro-dollars to be pumped into the economy while the local community had expected to reap from opportunities that the resource provided.
But the effects of a stalemate between locals and the government has seen residents block trucking of the crude oil for storage at the Coast with explorer Tullow counting losses by the day.
Both the national government and other stakeholders estimate the losses above Sh1 billion and counting following the impasse now heading into a month.
The losses are being incurred in compensation payable to companies involved in the mining of oil and its movement by trucks to the port of Mombasa following suspension of operations. “It is Kenyans who will pay for the losses including the very ones blocking movement of oil,” said Petroleum chief administrative secretary John Musonik.
Officials in the ministry said they were hoping to strike a deal this week.
On Wednesday, Tullow management said it had stopped work and trucking operations to move oil to the Coast citing insecurity, according to chief executive Paul McDade.
“What you saw locally was the local people, the community... using the trucking operation as a lever really to demonstrate to the national government that the security situation on the ground had to improve,” McDade said.
“It’s not a big issue for us,” he added. “We’d expect to be up there working, getting the field back operating again and trucks moving again in the near future. But it’s important to take the time out so that when we do return... we have a more secure environment.”
On June 3, President Uhuru Kenyatta flagged off four trucks ferrying crude oil to the Kenya Petroleum Refinery in Mombasa.
The oil was trucked under the Early Oil Pilot Scheme, an experimental programme. The resource will be kept in Mombasa as the country looks for viable markets.
Each truck carried 156 barrels. Tullow Oil had projected to produce at least 2,000 barrels per day.
At stake are demands by the local community that security in the bandit-prone region must be beefed up, more jobs and tenders before the oil transportation could resume.
Tullow Oil was forced to evacuate its workers following a series of protests by locals backed by their leaders that started on June 27 by blocking five trucks transporting oil along Lokichar — Kapenguria highway. It later escalated when they broke into the Ngamia 8 oil storage site demanding for security and fair share of jobs and tenders.
Evacuation of workers has seen critical services like water provision to residents near oil sites either scaled down or cut-off completely.
There have been attempts to end the impasse with the Turkana leaders hammering a deal with the Petroleum and Mining Cabinet secretary John Munyes to end the road blockade and resume oil movement. It later emerged that the deal was to be sealed by a binding MoU.
Area leaders led by Turkana South MP James Lomenen have maintained that no oil trucks would depart Turkana for Mombasa as had been agreed at the previous meeting which was also attended by Rift Valley Regional Coordinator Mongo Chamwanga until proper community sensitisation on the truce had been undertaken.
This was after community sensitisation meetings that were to be conducted at Lokichar and several centres in Turkana South and Turkana East sub counties to ensure that residents were aware of the deal reached between the State and elected leaders to allow oil transportation to resume failed to take place.
According to Mr Lomenen, despite the State’s assurances that security would be beefed up and deploying of specialised police units in some of the areas identified by leaders such as Lokori, little has been done to enlighten the troubled residents who had blocked the trucks on their fair share of jobs and tenders.
"Community participation has not been undertaken in areas like Nakukulas, Lokichar, Kalemungorok, Kakongu and Kainuk where trucks pass through. How will the residents understand that their demands had been met?" the legislator asked.
He pointed out that the resolution at the Lokori meeting had not reached to the community. He added that Nakukulas villagers, for instance, were forced them to break into Ngamia 8 oil storage site out of rage to access the monument where president unveiled to signify Early Oil Pilot Scheme has elders, seers and youth feeling disrespected.
The MP maintains that it would be premature to allow the oil trucks to leave until county security team and leaders sensitise the community.
Petroleum and Mining CS on Thursday revealed that Kenya has lost an estimated Sh300 million since the stand-off began two weeks ago that has delayed the transportation of oil from Lokichar in Turkana to Mombasa’s Changamwe storage site.
Kenyan authorities have yet to ink an MoU with the Turkana community and investors to unlock the transport stalemate that has blocked movement of the oil to Mombasa for storage in the wake of last month’s disruptions.
But CS Munyes disclosed that the investor and Kenyan authorities had agreed to draft a MoU that would be presented to the local leaders in a week’s time to append their signatures.
Petroleum CS warned that the deadlock was likely to cost more should the stalemate persist in the coming days.
“We are losing US$10,000 (Sh1 million) daily due to this stand-off to shut those operations. If we continue like this, the losses will reach Sh1 billion in the next two weeks,” explained CS Munyes.
The CS added that the State’s considered security for the locals and the oil is important and that over 600 security personnel including Administration Police and General Service Unit had been deployed to boost safety.
He hopes that the binding MoU will put to an end the constant road blockades in case of conflicts.
“We have had issues of moving crude oil from Lokichar to Mombasa…. the investor has decided we undertake MoU which is being drafted by ministries of Petroleum and Interior and the investor for us to sign before we commence the transportation.”
“That this should be finalised next week and we meet the local leadership and let them to append their signatures that stopping of truck in future to air their grievances should be discouraged … once we sign this agreement next week you will see the trucks moving once again,” added the CS in Eldoret.
Tullow and partners early this week said the freeze in transporting the oil has left them with a heavy cost burden estimated at Sh200 million over the past two weeks besides delaying the early export plan.
Tullow Kenya managing director Martin Mbogo called for a speedy resolution of the deadlock, saying the delay is hurting the company’s operations.
“Based on the current inventory estimates, essential supplies necessary to run Kapese Integrated Operation Base (IOB) in Turkana will run out in the next 14 days after which we will have no option other than a complete shutdown of the camp,” noted Mr Mbogo.
Tullow together with partners have invested a total of $2 billion (Sh200 billion) in developing the Turkana fields, the cost of which is expected to be recovered from the sale of oil.
Delay in resumption of oil operations is causing a lot of misery to section of residents living at oil sites in Turkana South and Turkana East sub counties.
Local businesses have also been hit as most have scaled down especially at Lokichar, along Kitale-Lodwar Road. Most affected businesses are hotel and accommodation, transport services and fuel services.
Other locals working mostly as casuals at oil sites have been temporarily rendered jobless following the stalemate. A local leader Samwel Lomodo observed that residents and their livestock are currently facing starvation due to lack of water, a situation that was weakening further the relationship between the host community and the British oil exploration firm.
"Currently taps are dry, the expansive bare land without a permanent river in the vicinity is what the residents are forced to live with. The rains stopped long time ago and those relying on scoop holes are forced to dig deeper to quench their thirst and get water for livestock,” he said.