What Kenya’s oil, water discovery means

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A Tullow exploration site in Turkana. BG Group plans to spend Sh13.7 billion in drilling for oil and gas at its two offshore blocks located East of Mombasa island Photo/File  NATION MEDIA GROUP

In Summary

It is noteworthy that the country has discovered deposits of crude petroleum and underground water reserves, both in northwestern Kenya.

That viable quantity of crude petroleum and vast water resources have been discovered in Kenya changes the policy landscape in material ways.

The first reason is that in spite of earlier exploration; the prospects of petroleum discovery had been modest, suggesting that the country would continue to import petroleum energy.

In regard to water, the prospects were even darker with the knowledge and common affirmation of the country as a water scarce country.

Thus, the year has presented very good news but taken together, they represent mixed blessings.

The significance of the double find does not escape keen minds because of the direct responses to both discoveries.

TRANSPARENCY

Unlike the situation with crude petroleum discovery last year, the confirmation of the aquifer was handled in a far more transparent and certain terms.

With admirable clarity and forthrightness, the Cabinet Secretary for Environment announced the discovery of the aquifer, stated clearly the quantity and some suggestions for its applications in the future.

The most glaring feature of the statement that was made was the express undertaking to ensure that the water resources would be used equitably.

Contrast this to the first statements made when the oil discovery was made and one sees that truly water and petroleum do not mix.

Water, similar to its clear nature was announced with clarity and confidence while the petroleum announcement was made in a board room with little detail on quantities or the methods for its exploitation.

Since then, it has emerged that a law for management of oil revenues is in the pipeline and that a sovereign wealth fund will be established.

All this information came to the fore before the quantities of crude oil were confirmed or the detail of exploration and extraction contracts were spoken about.

Consistent with discoveries in countries with incompletely consolidated democracies and low-income nations, petroleum discovery provides the real tests to transparency in public affairs.

Comparing water and oil, the trade value of petroleum exports is assumed to be higher especially because it is traded in barrels designated in foreign currency.

And yet in terms of the possibility of improvements in Kenya’s welfare, water is most likely to have enduring effects.

This is because the declared quantities of crude petroleum that have been declared are still close to 500 million barrels while the volume of water confirmed would last for up to 70 years if extracted at today’s levels.

OIL EXPLOITATION

In essence, unless discovery of larger petroleum suddenly rises, it is accurate to state that Kenya is still more water rich than it is oil rich.

This reasoning is informed by the fact that extraction of crude petroleum deposits at the African average of about 200,000 thousand barrels per day would exhaust the discovered fields in less than one decade.

Put differently, the crude petroleum resources that have been discovered work out to about 14 barrels of oil per Kenyan before exhaustion. For that matter, it is not correct to state that Kenya is oil rich country.

That statement would be inaccurate based on the confirmed quantity of crude reserves.

Exploitation of both water and oil reserves are mutually supporting too. For instance, the extraction and refinery processes for crude petroleum requires use of water.

On the other hand, if the water reservoirs were exploited reasonably, the transmission of water through large distances would require complicated infrastructure and use of high amounts of energy.

That means that the challenge of constructing infrastructure is necessary for both and that optimisation would be possible.

The engineering challenge is not impossible but the cost of the same is bound to add to the need for expanded options for funding.

In conclusion, the concurrent water and petroleum finds present common new challenges with transparency, environmental management, measured exploitation and policy reforms.

However, for all the excitement out there, unless the amount of petroleum find improves by a large quantum, it is more accurate to think that the bigger blessing is the water find while both resources present common challenges.

Together, these find represent the most important ways to assess the competence of future and present political administrations.