Opinion and Analysis
Prepare Kenya for oil, gas exploration
Posted Tuesday, August 7 2012 at 20:43
Kenya struck oil, which is in the process of being quantified for commercial viability, only six months ago.
Since then, there has been an influx of big-name upstream companies intent on participating in oil and gas exploration, both offshore and onshore, an indication of good prospects for finding more hydrocarbons.
The country is now moving from the earlier phase of “wooing” investors through lenient contract terms to invest in a hitherto frontier country to a strengthened negotiating position when commercial quantities of oil are confirmed.
The new emphasis now should be on how to fully leverage Kenya’s financial advantage in upstream contracts.
As the country moves forward, it will need to fully execute its obligations to investors by ensuring facilitation that would allow quick oil and gas development. This would in turn lead to early monetisation of oil and gas finds.
As excitement for finding oil ebbs, we should now focus on establishing a comprehensive oil and gas policy and strategy; creating governance structures and institutions to steward potential oil and gas development; and create human capacity to manage the newly found wealth.
The coverage of upstream oil and gas in the Draft Energy Policy may not be sufficiently detailed to fully address all the sector issues and challenges. A separate, more detailed upstream oil and gas policy and strategy, is essential.
The government should commence training Kenyans to equip them with skills to exploit the new resources.
Deserving Kenyans will require to be sponsored to overseas universities to acquire knowledge in various fields like legal contracting, geophysics, drilling engineering, and refining economics.
The skills will enable the country to acquire competencies and legal-technical independence in managing the resources.
There is also need for the government to establish a first class petroleum faculty at a local university to offer courses on petroleum.
To ensure quality, the faculty should be funded and monitored directly by a special petroleum education fund.
Ultimately, there will also be need to focus on training of technicians in oil and gas drilling and engineering.
As mentioned before, the gas policy and strategy should outline preferred options to monetise oil and gas production, and how to integrate oil revenues into the growing economy.
This is an area that will require a lot of input from fiscal policy experts and economic planners so as to get it right. This process should not be rushed and should be given the widest expert debate possible.