Festering differences between the Energy ministry and French oil major Total could disrupt Kenya’s upstream oil industry even before it begins commercial production, an industry lobby has warned.
The French firm last month acquired Maersk Oil’s global business, giving it a 25 per cent stake in the three blocks in Lokichar that are being readied to start oil production. It will partner with Tullow Oil – which is the operator and has a 50 per cent stake – and Africa Oil (25 per cent) in the blocks 13T,
It will partner with Tullow Oil – which is the operator and has a 50 per cent stake – and Africa Oil (25 per cent) in blocks 13T, 10BA and 10BB.
The Kenya Civil Society Platform on Oil and Gas (KCSPOG) said yesterday the frosty relationship between Total and the ministry, however, threatens to overshadow accruing benefits such as technical expertise and the financial muscle that the French company could bring to the table to help expedite the Lokichar project.
Total is credited with having convinced Uganda to divert its crude oil pipeline to Tanzania, ditching an earlier plan to build an export pipeline jointly with Kenya, much to the Government’s chagrin.
Uganda in picking Tanzania over Kenya said the move made more economic sense considering the quantities of oil that the two countries have discovered so far.
According to the lobby, the differences in opinions held by the Government and Total could be disruptive to the extent that they could affect the pace at which commercial oil production in the Turkana oil fields moves.
“Total can play either a supportive or disruptive role in the Kenyan oil sector. The first scenario is that the relationship between Total and the Government of Kenya could be ambivalent and possibly strained. It will be interesting to see the relationship that Total will have with the Government of Kenya and other stakeholders, especially after side-lining Kenya in its decision to opt for the Tanzania route for the East African Crude Oil Pipeline (EACOP),” said KCSPOG Co-ordinator Charles Wanguhu in a statement.
“Any attempts by Total to push Kenya to join up with the EACOP are likely to be rebuffed by the Kenyan Government due to the latter’s commitment to the LAPSSETT (Lamu Port-South Sudan-Ethiopia-Transport) route development.”
The acquisition of Maersk Oil adds to Total’s interest in Kenya’s oil exploration that includes block L22 in offshore Lamu.