The government has over the last decade inspired a lot of hope that Kenya would at some point join the league of oil exporters and with it, add another foreign exchange earner to our economy.
The discovery of the oil in 2012 elicited excitement and much anticipation. Other than the people of Turkana who finally saw the resource as a means of getting meaningful investments in terms improved security, roads, water, health and other essential infrastructure, emergence of oil sector would further lift the economy, further enabling the country’s economy to be more diversified as well as boosting foreign exchange revenues, which largely come from agricultural commodities.
The lofty dream now appears to be falling apart. The biggest blow has been the withdrawal of two of the joint venture partners in the Project Oil Kenya. Canadian firm Africa Oil and the French oil major Total have quit the project, leaving Tullow Oil as the only driver of the dream. Africa Oil stated that it is exiting Kenya to focus on production and high potential exploration opportunities, perhaps dissatisfied with the progress that Kenyan project has made so far.
Earlier, the joint venture partners had been courting two Indian companies (ONGC Videsh and India Oil Corp – both owned by the Indian government) to come onboard the project as strategic partners. But reports earlier this week indicated that India Oil Corp has abandoned the plan.
Three different firms indicating they are no longer interested in the Project Oil Kenya, with the revelations coming only days apart, is not only a major setback, but also begs the question what could be the problem.
Is it that the doing business environment in Kenya, especially for the fledgling oil sector, is not supportive for the players including new entrants? Tullow Oil and its partners have for years been looking for a strategic partner.
The new firm, the partners in the past have said, would be the one that carries the project through the commercial phase. Progress has been slow and it only last year that the company said the two Indian firms had expressed interest. What could be the factor that has been repelling companies from joining the project to get the oil off the ground?
Although Tullow has over the years said the oil is adequate for commercial venture, is this actually the case or have these companies stumbled upon information that tells otherwise?
Could it be that while the quantity is commercially viable, the quality of the Kenyan oil turns off investors? Is it that the hype around renewable energy has watered down the prospects of fossil fuels and emerging oil provinces such as Kenya can no longer attract huge investments in the sector that is deemed a major polluter?
The government owes Kenyans the truth. Should the country continue hanging on hopes that it can eventually earn petrodollars when at every turn, this dream is usually pushed further into the future?