Tanker trucks that used to haul oil products, ferry the crude oil during a pilot scheme to export crude oil, as they arrive at the Kenya Pipeline Company in the port city of Mombasa, Kenya June 7, 2018. REUTERS/Joseph Okanga The cautionary advice comes as both government and its citizenry continue to battle the management of expectations from the impending decision on the full-scale exploration of the country’s crude deposits.
The obsession of oil revenues by both government and oil-rich communities is equitable to putting the cart before the horse given the pending appraisal of ongoing oil exploration activities and the FID by Tullow.
The construction of an 800 kilometers pipeline between Lokichar and the Lamu port at the estimated cost of Ksh.200 billion is anchored on the project’s final investment decision as is the cross-listing of NOCK at the LSE and the NSE respectively.
Stakeholders from Kenya’s oil and gas sector have sounded the alarm on the lopsided focus on proceeds from oil exploration to warn of hidden risks to the fiscal obsession.
The cautionary advice comes as both government and its citizenry continue to battle the management of expectations from the impending decision on the full-scale exploration of the country’s crude deposits.
Charles Wanguhu, a coordinator at the Kenya Civil Society Platform on Oil and Gas says the conversation on the country’s oil and gas sector needs to tilt to beyond just revenues to incorporate the assessment and audit of existing exploration activity.
According to Wanguhu, the country may deplete revenues from the sale of early oil in the reimbursement of funds consumed during the exploration as the stated figure moves northwards of Ksh.220 billion.
“We need to manage our expectations on what the revenues mean. Early oil may actually make no money especially if the prevailing market prices for crude persist. We might lose money as we seem to be already spending more than we are looking for from the sector,” he said.
Further to the loss of revenues, Wanguhu warns that a buildup in expectations before a final investment decision by Tullow – the chief exploring firm – is likely to end up in desperation which could afford the entity, the opportunity to reap a better deal from government.
Moreover, there exist real risks to environmental preservation in the oil-rich county of Turkana, this as the production of crude is expected to utilize water as a raw material from the moisture-scarce […]