Export of oil expected to start early

Export of Kenyan oil is likely to begin sooner than anticipated with the government under pressure to resolve a dispute over the sharing of revenues between Nairobi and the local community.

British explorer, Tullow Oil, which contends it has invested a staggering Sh100 billion in Kenya over the past six years, is pushing for implementation of the Early Oil Pilot Scheme (EOPS) to enable it test and profile its wells, start recouping its investments and arrest its loss-making stream.

The push by the firm comes at a time when there is some pessimism about Kenya’s petrodollar dreams after a full assessment of all the exploration and appraisal data showed the country’s recoverable crude in south Lokichar basin stands at 560 million barrels and not 750 million barrels as earlier believed.

READ: Tullow set to spend Sh17bn in developing Turkana fields

READ: World Bank dims Turkana oil hopes

However, Kenya has sunk only a few explorative wells and the opportunities for greater oil finds exist.

The appointment of John Munyes as the Cabinet Secretary for Petroleum might ease relations with the host community and may aid the EOPS programmer.

The community has vowed that no oil will leave Lokichar before their demands are met.

CS MUNYES
The republishing of the Petroleum (Exploration, Development and Production) Bill and its anticipated tabling in Parliament any moment appears to be another move in which the government is hoping to use it numerical strength to pass the Bill despite not addressing the contentious issue of revenue-sharing.

The republished bill still provides that the local community will only be entitled to five per cent of the crude oil revenue, the county government 20 per cent and the national government 75 per cent.

Initially, Mr Munyes opposed the revenue-sharing formula as Turkana senator and was pushing for 10 per cent for the local community, but as the Cabinet Secretary he will have to ensure the full implementation of the Bill if passed by Parliament in its current status.

“The nomination of Mr Munyes brings a different angle to the demands of the local community. He has to ensure the community stops opposing the scheme,” Charles Wahungu, coordinator of civil society group Kenya Civil Society Platform on Oil and Gas, said.

TRUCKING
It is not clear if Turkana Governor Josphat Nanok is supportive of the early oil project though he has largely been quiet in recent days.

Already there are signs that plans are in high gear to start the trucking of oil as evidenced by the fact that the Ministry of Petroleum has asked the Dubai based El Mansoura Petroleum Company to accelerate the installation of the Early Product Facility (EPF).

The EPF, which is a temporary equipment being rented at a cost of Sh100 million, will enable Tullow Oil connect all the 40 wells it has dug and thus achieve the targets of extracting 2,000 barrels of crude everyday in line with the EOPS projections.

A week ago, Petroleum Principal Secretary Andrew Kamau in his Twitter handle shared pictures of the facility being installed.

EXPORTATION
The three companies contracted to carry the crude from Lokichar to the Kenya Petroleum Refinery Limited storage tanks in Mombasa via road have also been informed to be on standby.

The fact that Tullow Oil has started staff downscaling and movement of equipment and machines from Turkana after announcing it has completed exploration and appraisal activities shows the company is now focused primarily on production and exportation.

“Seismic equipment is being moved out of Turkana because the focus now is basically on production,” a source familiar with the goings-on said.

Kenya is using the EOPS to join the league of oil exporting nations before large scale production can commence in 2021.