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Kenya oil block licences expiry rekindles Somalia border row
The Kenya-Somalia maritime border dispute has complicated oil exploration along this East African coast, which more than a decade ago was one of the world's hottest places to look for crude.
Three licences awarded to Italian multinational, Eni, for oil exploration in a disputed area off the Lamu Basin will expire at the end of this month, renewing focus on the fight between Kenya and Somalia over the blocks.
Both Kenya and its war-torn neighbour claim the oil blocks.
The spat has complicated oil exploration along a part of the East African coastline that over a decade ago emerged as one of the world’s hottest crude search locations.
A report by the Ministry of Energy and Petroleum shows the licences that Kenya awarded to Italian firm Eni Company for blocks L21, L23 and L24 will lapse this month, marking the end of the four-year validity period.
It remains to be seen whether Kenya will issue fresh permits for the blocks after in 2021 it rejected a top UN court ruling that decided mostly in favour of Somalia in the maritime row in a part of the Indian Ocean believed to be rich in oil and gas.
Somalia, which welcomed the ruling, filed the case in 2014 at the United Nations’ highest court dealing with disputes between states.
The blocks lie in a 100,000 square kilometres triangle in the Indian Ocean at the centre of a diplomatic tiff between Somalia and Kenya.
The area is said to be rich in oil and gas, highlighting why the two nations are fighting for its ownership.
Exploration activities in the area have been frozen for the past decade since Somalia took Kenya to an international court as the dispute escalated. Kenya has traditionally administered the area, including oil and gas exploration projects.
“The licences for blocks L21, L23, and L24 PSCs are set to expire in December 2024. No petroleum operations were ongoing in the three (3) Blocks following the international maritime dispute between Kenya and Somalia in the region where the blocks are situated,” the ministry says in the report.
Energy Cabinet secretary Opiyo Wandayi had not responded to the Business Daily queries on whether Kenya would issue fresh licences for the blocks.
It is also unclear whether Eni has applied for an extension of the licences. The other petroleum exploration basins are Anza, Tertiary Rift Basin and Mandera.
Kenya first awarded the exploration licences to Eni in 2012 as it sought to ascertain the oil and gas reserves in the area in the race to tap the billions of dollars once the reserves were commercialised.
This (Kenya’s decision) prompted Somalia to seek orders at the International Court of Justice (ICJ) in a push for reparations from Kenya.
The court ruled mostly in favour of Somalia, saying that Kenya had not proved that Somalia had previously agreed to its claimed border.
Kenya refused to recognise the ICJ’s jurisdiction, with former President Uhuru Kenyatta saying that this ruling would “strain the relations between the two countries”.
The dispute mirrors those in other parts of Africa where resources straddle boundaries that were first drawn only vaguely by colonial-era mapmakers.
In 2009, the two nations agreed in a memorandum of understanding, backed by the UN, to settle the boundary dispute through negotiation.
Documents show that Somalia first took Kenya to The Hague-based court in August 2014 where the Horn of Africa nation requested the Court “to determine, based on international law, the complete course of the single maritime boundary dividing all the maritime areas between the two nations in the Indian Ocean.
But two months later, Kenya raised preliminary objections to the jurisdiction of the court and the admissibility of the application.
The court rejected Kenya’s objection, setting the stage for the hearing of the case, which was, however, postponed twice in 2019 and 2020.
The hearings were held in a hybrid version in March 2021 with the court drawing a new boundary between several offshore oil blocks claimed by Kenya and Somalia.
Kenya did not, however, participate in the hearings whose rulings were largely in favour of Somalia. Mr Kenyatta said this decision would hurt diplomatic ties between the two neighbours.
The Tertiary Rift Basin currently offers Kenya the best bet of becoming an oil exporter by tapping the wells that were discovered in 2012 in South Lokichar.
However, delays in the government’s approval of the Field Development that a British firm, Tullow, submitted and struggles to get a deep-pocketed investor to de-risk the project have derailed the commercialisation of the oil reserves.
Tullow holds that the future of the project depends on the company getting a strategic investor. At least Sh469 billion is needed to commercialise the project.