Opinion & Analysis

EDITORIAL: Ensure transparency in Kenya oil industry

Turkana’s oilfields are set to turn hundreds of Kenyans and foreign experts into millionaires even before commercial production begins
Turkana’s oilfields are set to turn hundreds of Kenyans and foreign experts into millionaires even before commercial production begins. BD GRAPHIC | NMG 

Plans to start small-scale exportation of oil from the Turkana fields has obviously sparked a flurry of activity among business people who are increasingly becoming impatient to close deals ahead of the June date.

The plan involves transportation by road of some 2,000 barrels of oil from Turkana fields to the port of Mombasa daily. Indeed, this is a dream come true for Kenya, whose oil deposits were first declared in 2012.

Oil is big business across the world, known to raise the profiles of individuals, companies and nations.

Tullow Oil, the British oil explorer that discovered the oil, estimates that from 2011 it has paid out Sh33 billion to contractors and suppliers while the government of Kenya earns more than half a billion shillings annually in fees paid by the army of explorers across the country.

Kenya’s oil reserves are estimated at 750 million barrels so far and large production is expected to start in 2020. We warn that as Kenya tests how its exports will be accepted in the international markets, the hustle and  bustle of deal-making in a sub-sector that is known to attract only the wealthy and well-connected, transparency should rule the day.

This will be important because of the first impressions in the international markets and the need to know that Kenyans ought to benefit from the resource more than anybody else.

How Kenya and all the people in the oil business ecosystem move from here now will tell whether the country continues to enjoy goodwill, negotiate with the right people, and ensure that any benefits are not shortlived.

Tullow has promised to ensure that “as many local businesses as possible” will participate in the value chain.

A good promise but what is required is action, more than a promise and a thorough monitoring of the business so as not to reserve the whole pipeline to a small group, who may have connections that feed only a small goal.

Getting it right with a new product, a new field, and new markets is usually difficult, meaning Kenya will need to choose its advisers with inimitable finesse, openness, and honesty to gift it with top talent when navigating the oil terrain and its sometimes scary pipeline.

Without transparency, Kenya may be setting itself up for oil wars, like the ones that have hurt the business elsewhere on the continent.