NAIROBI, Kenya
The Kenya government plans to review oil policies, taxes and industry stakeholders’ rights and interests in an effort to spur foreign investment. Energy Minister Kiraitu Murungi told a regional energy conference under way in Nairobi that the move will create a conducive business environment attractive to foreign investors. “As a government we cannot just sit and allow people to trade licenses for our oil which is the future of Kenyans and we have to take care of it,” the minister told participants attending the East Africa Oil and Gas Summit in Nairobi late Tuesday.
The three-day regional summit is aimed at showcasing East Africa as a new oil exploration frontier and also mull investment opportunities in the sector. The East Africa Oil and Gas (EAOG) Summit brought together global oil and gas firms and energy ministers from Kenya, Tanzania, Mozambique, Uganda, South Sudan, Rwanda and Burundi. Murungi cited the “first-come first-served” policy as one of the policies to be revised to allow the first investor to bid for the oil block to own it.
The policy, he said, was being revised alongside others to ensure that Kenyan oil falls into the hands of competent oil companies that have the required resources and trained personnel to properly manage supply. The minister said the East African nation was delighted about the new oil discoveries in northern Kenya by foreign oil companies, adding that the government was working to realize a better future for all Kenyans.”I know this summit will shed light on this fairly new topic to our country, and it will help us come up with policies and initiatives to face the challenges bound to arise,” he said.
Murungi said the East African nation was keen to learn from the best practices around the world to guide the exploitation of oil in an effort to protect the country from the risks associated with oil. Kenya and the entire East African region, has witnessed intensified exploratory activity since 2003, which led to the discoveries of oil and gas in Uganda and Tanzania. There is also ongoing exploration in Ethiopia. The East African nation has drilled 31 dry wells in Isiolo, (northeastern Kenya) and Lamu (Southeast) and has lost a lot of money. Officials said the discovery of the commercial quantities of oil in Turkana, one of the poorest communities, should also ignite new investments in the economy of Turkana.
Many leads and prospects similar to Ngamia 1 have been identified and following this discovery the outlook for further success has significantly improved.The minister said the East African nation was set to review the Petroleum Exploration Production Act to include provisions that will iron out issues of production sharing agreements with oil companies, community empowerment, human rights, and environmental protection. According to Murungi, other provisions include developing local capacity to take up jobs in the oil companies.
“Such reviews could also see government-owned National Oil Corporation get 25 percent interest in oil producing companies in Kenya,” he said.”We have been trying to get the companies to give the NOCK the current interest of 10 percent and another 15 percent, which they pay upon production. This totals 25 percent. Those are the figures we have been working around,” he said.
The minister also forecast an increase in revenue once the oil is commercialized noting that oil prices in the world had notably risen in the recent past Murungi said there will be transparency in the disclosure of taxes and revenues between the host government, foreign investors, the local government and the people to allow for a smooth trade in the valuable commodity.
He also said the government was working with universities across the country to create a syllabus under which engineers, geoscientists, lawyers and petroleum analysts will be trained on matters pertaining to oil exploration to create a stable knowledge background for Kenya oil future. He assured foreign investors present at the forum that there would be peaceful general elections come next year and that they should not fear to invest in the country.
The summit has united regional and international investors and industry experts to share their knowledge and explore the current challenges and opportunities in the region.”We are looking at countries like Abu Dhabi, Norway and Ghana which have managed their oil resources fairly well as examples. However, we want to make Kenya a case study of the best management of oil in the world,” Murungi said. Case studies on using oil revenues for a diverse economy are covered on the summit programme in session 4 on the impact of increasing oil and gas revenues for the region. Some of the global oil and gas companies expected to attend include Tullow, National Oil Company of Kenya, Total, Afren, Chase, Betling, Yokagawa, Simba and Weateherford. (Xinhua)
Leave a comment