Kenya eyes five new oil blocks despite falling crude prices

Tullow oil rig used in drilling at Ngamia-1 well on Block 10BB, in the Lokichar basin. Kenya has seen a surge of interest for oil blocks after striking oil in 2012. [PHOTO: FILE/STANDARD]

Kenya will create and gazette five new oil blocks in the new financial year as it keeps its exploration dream alive despite falling global crude prices.

In a document, the Treasury says creation of the new petroleum blocks will be part of the Government’s efforts to increase ‘the availability and access to oil and gas.’

Currently, Kenya has over 46 gazetted oil blocks and the Energy Ministry expects to have at least five additional blocks every year in the next three years. Kenya expects to hold its first ever auction of petroleum exploration licences in 2017.

Recently, State House revealed that Kenya could use rail and trucks to transport crude oil from Turkana to Mombasa as the country races to hit export markets before the General Election set for August next year.

It is said the Energy Ministry offered Rift Valley Railways (RVR) the contract to transport oil over a distance of more than 800km, from Eldoret to the Kipevu-based Kenya Petroleum Refineries (KPR) from as early as February next year. This follows delays in constructing a joint pipeline with Uganda.

The Government also plans to drill 44 new geothermal wells in the new financial year as it deepens the march to clean energy.

The wells are expected to generate 220MW of steam according to details of the expected deliverables in the new 2016/17 budget. In the last two years, the Government has drilled about 24 wells through the Geothermal Development Corporation (GDC).

Under the new budget process, Treasury is required to present key performance indicators alongside the budget policy statement that will guide Parliament on what the budget expects to achieve.

It is a departure from previous budgets before the new constitution in which the Government only presented hard numbers without giving an indication of how it plans to achieve the goals of the budget.

The ministry of Energy is also expecting to continue training members of the public on nuclear related courses as well as hold 35 public awareness forums in the new year. In the current year, the Government plans to conduct 29 public awareness forums on nuclear energy.

On coal exploration, the Government plans to drill 30 exploratory coal wells. There are no indications of how much these activities will cost but it is expected to be part of the different budgets for line ministries.

The Government has maintained the number of new customers expected to be connected to the national grid at 1 million. The target is expected to remain the same in the next three years.

According to the targets, the Government plans to construct at least 5,000Km of new roads in the new financial year as well as purchase two additional ferries.

But budget experts and pressure groups have raised concerns in the Budget Policy Statement (BPS), that projects that the Government will spend Sh2.1 trillion in the new year.

Development spending

The International Budget Partnerships (IBP), a civil society group that analyses the budget said that while the national budget is not falling, there is an attempt to restrain expenditure growth and begin to reduce the deficit.

Treasury proposes an 8 per cent increase in expenditure, 14 per cent growth in revenue and 6 per cent cut in the deficit from the current year (2015/16).

There is a slight decline in the funding for ministries, departments and agencies from Sh1.505 trillion to Sh1.490 trillion. This reflects a drop in development spending at ministry level of roughly Sh64 billion, while recurrent expenditure is rising by Sh49 billion.

“This reflects a declining share of the budget going to the energy/infrastructure sector and an increasing share for governance, environment and education,” the IBP said in a statement.

BPS 2016 proposes to cut the share of the budget allocated for the infrastructure sector from 27 per cent to 25 per cent of the total budget. There is an equally large increase in governance, justice, and law and order sectors from 10 per cent to 12 per cent.

This is mainly driven by a significant increase (352 per cent) in the allocation to the Independent Electoral and Boundaries Commission (IEBC) as it prepares for the 2017 General Election.

The IBP argue that funding for counties has not been ‘cut’ as has been suggested, but it is growing more slowly than national funding.

“Our analysis shows that the national share of shareable revenue is to increase by 12.5 per cent, while counties will only rise by 7.9 per cent. This is much less than the 15 per cent increase proposed by the Commission on Revenue Allocation. No justification is provided for funding counties less than CRA recommends or for national revenue growing faster than county revenue,” the analysts said.

By Ochieng Oyugi 28 mins ago
Motorsport
Safari Rally 2024: Speed, fun and drink as Safari Rally action takes over 'Vasha'
By Mose Sammy 4 hrs ago
Golf
Fundraiser tourney head to Kisii course
Athletics
Kenya hoping to defend World Cross Country title in Belgrade
Football
Fifa threatens Kenya with ban again