Low crude oil prices to affect exploration

Global oil prices have been on a downward trend for the last few months owing largely to global oversupply of crude oil.

Currently, crude oil is trading at about $50 (Sh5,200) a barrel. This is bound to affect the development of crude oil infrastructure.

Kenya discovered oil a few years back and there are plans to construct a crude oil pipeline from Lokichar in Turkana County to Lamu County. All indications are that low prices in the international market will slow down or even delay exploration and development of crude oil infrastructure in Kenya.

Low global prices will of course benefit consumers, and it is expected to boost the country’s economic prospects due to the impact it will have on the industries that rely on energy. However, experts argue that such benefits will be eroded by strengthening of the dollar against the shilling.

Despite this state of affair, Kenya should cease the opportunity and address the underlying issues in the oil sector. The laws that govern drilling and exploration of oil need to be developed while, at the same time, consulting local communities to avoid hitches in later stages.

Local oil companies can also seize the opportunity and buy assets at low cost which they could develop later when oil prices start rising.

Oil drilling companies such as Tullow Oil and African Oil are slowing their activities in Kenya due to fear of further plummeting of global crude oil prices.