Kenya could soon pay the price for incessant delays in commercialising its oil project.
It is now a race against time to bring the oil to the ground at a time when there are increased concerns about the damage that fossil fuels are causing to the environment. Different factors over time have resulted in moving forward the date when Kenya will start oil production, which had at some point been expected to be around 2021 but all likelihood points to 2027.
Further delays could see the window available to the country to exploit the oil close as the world starts shifting from internal combustion engines to electric motors.
Energy and Petroleum Cabinet Secretary Davis Chirchir says it is critical to move with speed and exploit the oil that Kenya discovered a decade ago in Turkana County.
“The developed world used these resources for several centuries but at a time when we have discovered our resources, we have messed up the environment so much that the world has come to a common understanding,” he said.
“We need to work quickly within the window available to us today to ensure that we get this project moving. We need to work quickly and accelerate because of the climate change challenge.” He noted that it would be a matter of time before oil and gas companies as well as their financiers start making stringent demands before venturing into or financing new fossil fuel projects.
Many of these companies, including those that have in the past solely focused on extraction and utilisation of fossil fuels are increasingly changing and have set targets to decarbonise their operations in the near future.
Further delays in commercialising Kenya’s oil project in Lokichar, Turkana County, could see it being subjected to stringent requirements by financiers as well as facing difficulties in attracting partners.
“The climate change issues that come with the environmental, social and governance requirements from the owners of capital, who will only subscribe to the same ESG (Environmental, Social and Governance) values that to get capital today to develop a project that could be seen to be impacting negatively on the environment could be a challenge,” said CS Chirchir.
The project suffered a major setback recently when two of Tullow Oil’s partners - Total Energies and Africa Oil - pulled out, a move that saw Tullow assume full ownership of the project. This is in addition to the process of looking for a new strategic partner, which has dragged on for more than two years.
Tullow and its partners had been looking at a firm that they expected would help push the project forward to its commercial phase. There are reports of some Indian and Chinese firms expressing interest in the project.
The CS said the factors that may have seen the two firms exit the project include considerations of the environment.
“Under the ESG policy frameworks, it may be more prudent for an investor to put their money in a producing field or a field that is moving closer to producing as opposed to a greenfield where they would need to build infrastructure from scratch,” he said.
“Some of the considerations that they may have considered is whether they want to invest in a greenfield project under the current environmental challenge or put money in fields that are already producing.”
Mr Chirchir noted that these are the questions that the country would have to answer too in considering such fields as the coal in Mui basin in Kitui County, which while offering a much-needed fuel, is also a great polluter.
Other than coal, there are other oil basins that remain unexplored, but preliminary surveys in the past have shown that they have huge potential.
Kenya has four oil basins - Lamu, Anza, Mandera and the Tertiary Rift - and has been planning to issue exploration licences in these areas. “These are some of the issues that we needed to address ourselves. If we are going to make use of these resources, we need to accelerate the development of these resources in the window available to us as a country,” said Mr Chirchir.