Kenya To Begin Oil Block Licensing Despite Pending Energy Act

Kenya will offer new oil blocks to investors before the end of June after discoveries by Britain’s Tullow Oil in the East African country and neighboring Uganda made the country a frontier for oil exploration.  The licensing of the seven new oil exploration blocks to investors has been stalled by the Energy ministry because of a new law expected to boost investor confidence, with the presence of a legal and fiscal framework to commercialize natural gas discoveries.

The new law is expected to be sent to Parliament by June, which means they may have to wait more months for it to come into effect.  “We will offer the new blocks hopefully before the end of the financial year (June) based on the current law.  We can’t wait longer,” said Joseph Njoroge, Energy and Petroleum principal secretary.

Njoroge noted that Kenya was losing daily while dawdling, “yet we have discovered oil”. The wait, according to him is over as the country will start inviting serious investors.  The secretary added that out of 46 blocks, 41 had already been licensed to 22 international operators.

Inquiries from companies keen on acquiring exploration blocks have increased following discoveries by Tullow and its partner Africa Oil Corp in northwestern Kenya. The companies also doubled the estimate of their find in the South Lokichar basin to 600 million barrels.

Under the new law, policies for upstream, midstream and downstream sections are expected to be clearly defined in order to avoid overlaps and increase efficiency. Guidelines on natural gas exploitation are also expected to be provided in the new law.  Also to be enshrined in the new law is the creation of a sovereign wealth fund for petroleum revenue. The law is expected to also specify how it will be managed and disbursed.

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