Maiden crude oil export turns to focus on sharing of revenues

Tuesday, August 27th, 2019 00:00 |
President Uhuru Kenyatta, Petroleum and Mining Cabinet secretary John Munyes (second left) and his Tourism counterpart Najib Balala (left) and Mombasa Governor Ali Hassan Joho (right) arrive for the flagging off of the 200,000 barrels of first crude oil shipment at Mombasa Port yesterday. Photo/PD/NDEGWA GATHUNGU

Harrison Kivisu and Reuben Mwambingu

President Uhuru Kenyatta has reaffirmed that proceeds earned from Kenya’s crude oil exports will benefit the country equitably.

Speaking yesterday during the flagging off of Kenya’s first-ever crude oil shipment at the port of Mombasa, the Head of State said no one will be allowed to use the resource meant for the entire country to enrich themselves.

“Kenya’s resources belong to all Kenyans, we as leaders are just custodians… and not for individual benefit,” President Uhuru said before flagging off Celsius Riga, the ship carrying 200,000 barrels of crude oil left the Mombasa port shortly after midday destined for the United Kingdom.

The shipment worth Sh1.2 billion, a price much higher than what was initially projected, was bought by ChemChina after it won the tender early this month making Kenya the first Eastern Africa country to become an oil-exporting nation.

Inaugural export

This inaugural export, under the Early Oil Pilot Scheme, is intended to test the global market before the country embarks on large-scale commercial production in 2023.

President Uhuru said the government has put in place measures to ensure fruits of prosperity are shared in an equitable and sustainable manner. “As we proceed to full-field development, we will ensure that local communities are major beneficiaries of these resources,” the President assured.

Uhuru was reacting to clamour by various leaders among them governors who demanded that resources from their respective counties should benefit local communities.

Turkana Deputy Governor Peter Emuria Lotethiro, who represented Governor Josphat Nanok, at the ceremony said he had been sent by Nanok to confirm that their ‘goat’ meaning the oil, had finally been loaded into a ship adding local residents will expect a share of the goat.

On his part, West Pokot Governor John Lonyangapuo said after the Lokichar oil fields, in Turkana, are fully utilised the government should turn to his county which he said holds large deposits of oil saying when that time comes, his County will demand “ribs of the goat”.

“After others have exhausted the hooves, skin and the horns, we will demand the ribs,” Lonyangapuo told the President.

Uhuru insisted the government was keen to ensure Kenyans benefit from national resources.

“If we do that we will come to realise how wealthy this country is because this country is very rich. We will be able to develop this country and ensure that we fight poverty and build our infrastructure.

We need to identify ourselves as Kenyans not from where we come from. This oil does not belong to Turkana people, it belongs to Kenyans, the Port of Mombasa does not belong to the people of Mombasa, it belongs to Kenya,” said Uhuru.

The Petroleum Act 2019 provides 20 per cent of crude oil revenue goes to the county where the resource is mined, local community (five per cent) and national government (75 per cent). This formula is subject to review after 10 years.

At the same event, President Uhuru congratulated 136 Kenyans who have gained employment as seafarers on several ships owned by the Mediterranean Shipping Company.

The 136 seafarers are part of a contingent of 275 Kenyans who have so far gained employment as part of ongoing government efforts to position the blue economy sector as a key economic driver.

“We can happily disclose that the lowest salary these seafarers will earn is a minimum of Sh85,000 per month,” said the President.

After the flagging off the shipment, attention has now shifted to the construction of the Sh100 billion pipeline to move crude oil from Lokichar basin in Turkana to Lamu along the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) corridor.

Barrels of oil

Petroleum and mining cabinet secretary John Munyes said yesterday construction of the multi-billion- shilling pipeline will begin next year and is expected to end by 2023. The pipeline will be 821 km long and will transport around 80,000 barrels of oil per day.

“We are in the final stages of finalising plans for the construction of the modern pipeline and by 2020 all the plans will be complete for construction. This will enable us to spur the growth of the economy by creating efficiency in the transportation of oil from Turkana to Lamu,” said Munyes.

The CS expressed optimism the pipeline would be an economic game-changer, particularly for the six counties it will pass through, namely Turkana, Samburu, Isiolo, Meru, Garissa and Lamu.

“Regarding the pipeline, we are now at the development phase; the full field development plan will come by the end of this year. We are now working on the agreements for lenders to give us the money and securing land,” he said.

Kenya’s journey to joining the exclusive club of oil-exporting began in early 2012 when retired President Mwai Kibaki announced the discovery of the resource after years of exploration by Tullow Oil, a multinational oil and gas exploration company.

More on News