Energy and Petroleum Cabinet Secretary Charles Keter. FILE PHOTO | NMG
Taxpayers were on Thursday left at the risk of losing billions
of shillings in breach of contract payments after Energy and Petroleum
secretary Charles Keter announced that the government had suspended the
early oil export plan that was to start this month.
The payments will be made to private companies that were hired early this year to execute the plan.
The
sudden application of brakes on the plan, which was meant to test the
appetite for Kenya’s crude oil in the international market, comes barely
a month after three firms signed a Sh1.5 billion contract to move the
oil to Mombasa for shipping overseas.
Oilfield Movers,
Prime Fuels Kenya and Multiple Hauliers were hired to move the crude
from Turkana oil fields to the Kenya Petroleum and Refineries Limited
grounds in Mombasa meaning any delays may have financial consequences.
Mr
Keter on Thursday said the government had decided to stop the plan
awaiting the conclusion of the Petroleum (Exploration, Development and
Production) Bill 2015, which got stuck in the Senate after President
Uhuru Kenyatta sought to reduce the revenue share meant for the local
community from 10 to five per cent.
“After consultation
with the local leaders and the community, we have decided that instead
of having the project commence this month, we will defer it until the
Bill, which is pending before the Senate and as you are aware that can
only pass after we have the next parliament,” Mr Keter said.
The
uncertainty surrounding the exact timelines for the crude export plan
has left wide open the possibility of the government and the explorer
paying a heavy financial price for suspension of the contracts signed
with private companies.
The early oil export scheme was deigned to run between mid-2017 and mid-2019.
Delayed
start of the scheme also means that Tullow, the explorer, will spend
more on storage and security of the oil -- money it is entitled to
recover from the revenues earned.
Tullow, which
discovered oil deposits in Kenya in 2012 has signed a production sharing
contract with the government, whose details have not been made public.
Kenya
is yet to audit the British explorer after it claimed to have spent
over $1.5 billion (Sh150 billion) in oil exploration activities since
2010. Africa oil and Mersk oil are the other firms involved in the
scheme.
Tullow Oil Kenya country managing director
Martin Mbogo, however, dismissed the possibility of his company
suffering any commercial consequences from the change in timelines only
terming it, a ‘lesson to learn.’
“The contracts were
designed in a manner that that they can be turned on and off easily.
Flexibility was built into this and we do not see any adverse effects
from the changes,” Mr Mbogo said adding that the contracts can be
switched on and off within five to seven days.
“Our
base business is not impacted with the position we are in today so we
are confident that we have picked up the lesson and we should take this
as a plus,” Mr Mbogo saod during a joint press conference at the
Ministry of Energy offices.
People familiar with the
early export scheme said some of the tanktainers - specialized transport
containers and the trucks had been moved to Lokichar in readiness for
the failed exercise.
Last year, the Kenya Civil Society
Platform on Oil and gas raised concern over the plan to truck the crude
from Turkana -- terming it a Sh4 billion loss making exercise.
ALSO READ: Kenya's first crop of oil barons
Until
Thursday, the government had maintained that the project would go on
and that Kenya would enter the league of oil exporters this month.
Tullow
Kenya already gave a nod for the supply of 50 trucks and tanktainers
to lift the 2000 barrels of crude to Mombasa every day with each taking
an average of 6 days on a single round trip.
In the
plan, Kenya had hoped to build a brand in the international market ahead
of the move to full commercial production of 100,000 bbl/d of oil
either in 2020 or 2021.
No comments :
Post a Comment