President Uhuru Kenyatta has flagged off Kenya’s maiden crude oil export with a warning against corruption that may deny people the opportunity to benefit from the resource.
The crude oil will be shipped by Chinese state-owned firm ChemChina which won the tender to buy the maiden Kenyan oil at a premium early this month.
Mv Celsius Riga will deliver the Sh1.2b consignment Malaysia.
On August 1 the Government announced that the oil produced in Turkana and stock it at the Kenya Petroleum Refineries Ltd’s (KPRL) storage facilities in Mombasa would be sold at Sh1.2 billion ($12 million).
Speaking during the flag-off, President Uhuru said the country with its partners will continue to pursue natural resources but without compromising the future generation.
He said more resources would be channelled into upgrading infrastructure that would ease transport of oil from the fields to the port.
“The government will ensure that the local communities benefit from the oil and that the fruits of the resource are also shared in an equitable and sustainable manner,” he added. “I urge all those in charge to avoid any misuse of the resource that would deny others from its benefit,” he added.
Petroleum Cabinet Secretary John Munyes said plans were underway to have a pipeline between Turkana and Lamu Port to ease transportation of the oil. “The 2020 plan for a pipeline connecting Lokichar-Lamu are on track, we need more commitments on land and water to enable us to move faster with everything,” he added.
Representatives from Tullow Oil, Total, and governors from Lamu, Mombasa, West Pokot, Kwale, Taita Taveta and Turkana Deputy Governor attended the Monday function.
Tullow Oil PLC CEO Paul McDade noted that the Early Oil Pilot Scheme (EOPS) is an important step towards Full Field Development (FFD).
“This shipment is the first under EOPS and trucking will continue for the next 18-24 months. For Project Oil Kenya, the Kenya Joint Venture Partners in collaboration with the Government of Kenya target to reach a final investment decision in 2020” McDade said at the flag-off event.
He added that Tullow and the Joint Venture Partners-Africa Oil and Total believe that Project Oil Kenya is going to be transformative to Kenya and is aligned to the Government’s Big 4 Agenda.
The export of the Crude Oil will start with a shipment of 200,000 barrels to Malaysia by its Chinese buyers marking Kenya’s entry into the league of oil-exporting countries.
Tullow estimates that Kenya’s onshore fields in Turkana hold 560 million barrels of oil and expects them to produce up to 100,000 barrels per day from 2022.
The ministry of Petroleum earlier said ChemChina UK Ltd had outbid seven other companies from Europe and Asia that had expressed interest in acquiring Kenya’s oil.
“ChemChina UK Ltd was selected following a competitive tender process through which an invitation to bid was issued to prospective buyers on 26th July 2019 and to which there was strong response with eight bids received from international firms representing European and Asian refineries,” said the ministry of Petroleum in an earlier statement.
“Note that ChemChina UK Ltd was selected on the basis of their offered price and according to standard international terms.”
ChemChina – also referred to as the China National Chemical Corporation – operates in six different sectors, including oil processing, agrochemical production and tire and rubber production.
Information on its website says it has nine refineries with a combined annual crude oil processing capacity of 25 million tonnes.
The discovery of the black gold, oil in 2012 in Turkana put the remote county that had been marginalized for years in the global map.
The hydrocarbons discovered has since been proven commercially viable and is estimated at 750 million barrels and a further prospect of 2.9 billion barrels.
An Oxfam report stated that the production of the oil can be carried out for a maximum of 23 years meaning that it will be depleted by 2043.
The report titled ‘Protecting Future Oil Revenues: Priorities in Advance of Production’ by the global development charity says the country will make on average of about Sh280 billion every year which will translate to about Sh. 6.4 trillion over the 23-year period.
In June last year, the President also flagged off the first tanktainers ferrying crude oil to Changamwe in Mombasa.
Kenyatta urged residents to view the oil development as a blessing and allow the smooth running of the process.
He noted that it was important for the residents to allow the oil process to continue if they wanted to gain full benefit from it.
"This process will help establish Kenya as a crude oil exporter and will provide valuable information for future exploration. Economies that did not manage their revenue share have suffered. There have been wars. Brothers have fought against brothers. Mothers have been forced to bury their children. I hope that we will view and make the oil process a blessing instead of a curse," said the President.
He urged the communities to ensure that disagreements surrounding the oil issue are sorted out amicably before they escalate higher.
"The share will be 75 per cent to the national government, 20 per cent to the county and 5 per cent to the local community. The community should demand services including schools, water, electricity and other social amenities. You should not say that the money is divided amongst yourselves. Instead, build amenities that will make our future generations proud of what we did,” he added.