Kenya’s plans to auction oil and gas blocks to prospecting firms through competitive bidding for the first time will be delayed amid an ongoing process to draft regulations that will guide the process.
The government had aimed to competitively auction 10 blocks of oil and gas located in the Anza and Lamu basins this month, but this will be delayed until June 2026 at the latest.
Joseph Otieno, Commissioner for Petroleum, says the State Department for Energy and the sector regulator are drawing final regulations that will guide critical aspects like bid evaluation and also the time that it will take to scrutinise the offers.
Review of the regulations is in line with the changes contained in the Petroleum Act, 2019, where oil and gas blocks will be given to investors via competitive bidding as Kenya seeks to further exploit its potential in oil and gas.
“We are fine-tuning the legal framework on this process. Remember that it is the first time that Kenya is doing competitive bidding for oil and gas blocks. We undertook public participation last month, and now it is more of incorporating public comments into the regulations than sending them to the Attorney-General,” said Mr Otieno.
“Data on the 10 blocks is ready, and we have not vacated this. We expect to do the competitive bidding for these blocks in the current financial year, which ends in June 2026.”
The 10 blocks are part of the 50 blocks that the Ministry of Energy has prioritised for potential exploration, citing huge potential for oil and gas. The blocks are mostly in the coastal and north-eastern regions.
It remains unclear whether the 10 blocks include the area disputed between Kenya and Somalia, which saw the latter file a case at the UN’s International Court of Justice (ICJ) in 2021.
ICJ ruled in favour of Somalia in the case that touched on three blocks whose exploration licence Kenya awarded to the Italian firm Eni. The permits expired in December 2024.
Previously, oil and gas exploration firms would express interest in blocks potentially rich in hydrocarbons. This would be followed by talks with the State and ultimately signing a production sharing contract (PSC).
A PSC is an agreement for oil or gas exploration and production between the government and a company. It governs the exploration, development, and production of hydrocarbon resources in a specific area.
Kenya is keen on stepping up exploration and potentially commercial production of oil and gas as the country seeks to build on the Turkana oil dream.
The country, through Tullow Kenya, discovered commercially viable oil reserves in blocks 10BB, 13T and 10BA in South Lokichar, Turkana County in 2012, but efforts to turn this into a commercial production venture have been delayed.
Tullow Kenya sold the entire project to Gulf Energy last April for $120 million (Sh15.5 billion), with the government betting on the change in ownership to finally unlock the project and start commercial production of the oil.
