It was evident from the Dubai Climate Forum that oil and gas producing countries were not ready to give up their resources until the transition to renewable energy has walked its full course.
It is national economic and energy security self-interests that are defining oil producing countries' climate posturing. Even investors and capital providers are now willing and ready to fund new oil developments where returns are demonstrated.
With its 100,000 barrels per day proven oil deposits, Kenya should be looking at most pragmatic ways to monetise its Turkana oil resources guided by national economic expediency.
Kenya should not volunteer to be a “climate saint” and deliberately leave its oil in the ground, in the name of climate action. As long as demand for imported oil lasts, which could be for another 15-20 years, Turkana oil can significantly add value to Kenya’s GDP.
As currently configured (pipeline exports via Lamu), the Turkana oil project will find it difficult to attract global investors mainly due to high unit costs, reduced effective project life due to energy transition, and known security risks.
These days, oil investors prefer offshore investments due to shorter project implementation times and quicker returns.
Kenya needs to explore alternative localised options to commercialise Turkana oil and I will discuss a few.
The readiest option is to categorise Turkana crude oil as “fuel oil” for industrial heating in our heavy industries (cement and steel) which currently use imported fuel oil and coal.
All that is required is to re-design the furnace fuel injection systems and we are in business.
I suggest we talk to “Guru” of Devik industries, who is a proven expert in designing import substitution solutions to save Kenya’s forex. We can start by immediately trucking Turkana oil to fuel the new cement venture at Ortum in West Pokot.
The second option is to invite refining entrepreneurs from Russia, India, or China to configure a simple “teapot” refinery in Turkana to produce mainly diesel, kerosene and LPG.
This is exactly what South Sudan is doing with Russian investors. This option will significantly improve Kenya’s balance of payment by reducing oil import bill.
Yes, never-ending evaluations and studies on Turkana oil will not deliver jobs and incomes to Turkana County population and Kenya in general.
The current balance of payment pressure dictates that we think out of the box to deliver early value from Turkana oil.
