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Suspension dashes hopes of Kenya exporting oil

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The government has suspended the much-awaited exports of oil from Turkana, dealing a major blow to Kenya’s hopes of breaking into the lucrative international fuel business.

Energy Cabinet Secretary Charles Keter today blamed the suspension on Parliament’s delay in passing the Petroleum (Exploration, Development and Production) Bill.

The development came as cases of banditry and other forms of insecurity continue to be reported in Turkana region. The government had set a June 30 deadline for the first batch of oil to leave Kenya, but that will now only be possible after the August General Election.

Mr Keter said the government had to wait until the Senate passes the Bill that stipulates how the national government, the county and the local community will share oil revenues. There is also ongoing tension between the local community and Tullow Oil, the British company drilling for oil in the region.

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In the past few weeks, there has been an upsurge of attacks on Tullow employees by bandits.

Tullow had already extracted 40,000 barrels for transport to Mombasa but bandit attacks have frustrated that plan. The companies building the key Kitale-Turkana road, which was to be used to ferry the oil, have also reported attacks on their employees.

Construction work has been suspended in some parts, reports indicate. But Mr Keter on Thursday sought to downplay the state of insecurity in the expansive county that is the size of Rwanda.

“Insecurity has nothing to do with what Tullow Oil has been doing in Turkana,” he said. “Insecurity happens everywhere. There have been [incidents] of insecurity in the area even before drilling started.”

He said the government was aware that politicians were fanning tension in the county on the expected oil exports, especially on the use of the oil revenue-sharing formula that now awaits Senate approval.

“People can say what they want. It is political season and all this will pass but it does not mean that the government will not deliver,” he said. “We are awaiting for Senate to pass the Bill. We could have gone ahead and exported, there was nothing stopping us, but the government felt it is important this Bill is passed.”

Mr Keter also said work on the Kitale-Turkana road construction was under way. In September last year, President Kenyatta wrote to Parliament asking legislators to reconsider sections of the Bill, which they had just passed. The original Bill had stipulated that the community get five per cent of the oil revues.

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The county government was to receive 20 per cent of the cash and the national government 70 per cent, but the lawmakers had amended it to give the local community 10 per cent. In his memorandum, the president urged the House to amend the proposed law to retain the five per cent given to the local community.

The National Assembly passed the memorandum, but the Senate was yet to debate it before it adjourned for the elections. The president’s memorandum has now been turned into a political issue between Jubilee and the National Super Alliance.

Three companies — Prime Fuels Kenya, Multiple Hauliers and Oilfield Movers — last month won a Sh1.5 billion tender to transport the crude to Mombasa under the Early Oil Pilot Scheme (EOPS).


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