What sale of first crude oil means to Kenyan economy

Kenya’s President Uhuru Kenyatta Thursday announced that Kenya has exported its first crude oil in a deal that has seen the country earn Ksh.1.2 billion.

The crude is currently being stored at the partially rehabilitated Kenya Petroleum Refineries Limited in Changamwe, Mombasa. The consignment has been delivered by trucks since July last year under the early oil project scheme.

Canadian firm Africa Oil and French company Total are the joint partners in the deal with the government expected to take up a stake through State-owned oil firm, National Oil.

Kenya’s crude oil is categorised as Brent crude, which is classified as light and sweet, meaning it has less sulphur at below 0.5 per cent. Ordinarily, such a category would fetch higher prices at the international market due to its refined form that produces high-value products — petrol and diesel.

As the country targets full production in 2021, Tullow Oil has hired UK firm Wood to undertake design works on a pipeline that will ferry the crude oil from Lokichar onshore fields to Lamu port. The facility is expected to be completed in 2019.

The big question now is whether Kenya is ready for the good and ills that come with the resource.

Top among the concerns is managing negative results that can eclipse the benefits of the resource resulting in conflict and citizens languishing in poverty.

Though Parliament is yet to pass The Petroleum Exploration, Development and Production Bill which guide how oil revenues will be shared, it is expected the formulae will be honoured and not become a source of conflict. In the agreement host communities will get five per cent of the revenues, Turkana county 20 per cent and national government 75 per cent.

When oil billions start flowing, when full production commences, there is a risk of other sectors of the economy being ignored putting the country in the precarious situation should petroleum prices take a sharp dive.

As EOPS gathers steam, the road network between the Turkana oilfields and Mombasa is set to get a facelift.  Local communities are set to benefit from petroleum-related courses and get connected to other facilities enjoyed by majority of Kenyans such as power connection, telecommunication and banking services.