Lokichar residents protest next to the plaque showing the launch the Early Oil Pilot Scheme on June | NMG
The future of Kenya’s Early Oil Pilot Scheme (EOPS) has been
left in doubt after Tullow Oil threatened to shut down its operations in
the Lokichar oil wells in Turkana County, if the stalemate that has
crippled production and transportation is not resolved in the next two
weeks.
Disputes on politics, security and
resource-sharing between the community and the central government have
disrupted the shipment of crude from Lokichar in northwestern Kenya to
the refinery in Mombasa County on the Coast for more than three weeks
after local leaders, Tullow Oil and officials from the central
government failed to reach a deal to unlock the impasse.
“The
negotiations are still ongoing; “We are hopeful that we can resolve
this matter as soon as possible,” said the Principal Secretary in the
Ministry of Petroleum and Mining Andrew Kamau.
In a
statement, Tullow said it is seeking the backing of the government,
Turkana leadership and the community which would ensure future
operations are not interrupted.
“Our estimates show
essential supplies needed to run the Kapese Integrated Operation Base
will run out in the next 14 days, after which we will have no option but
to shut down the camp,” said Tullow.
A shutdown would
further delay crude oil trucking to the refinery by about two months
since the signing of the memorandum, which is now under review by the
ministry.
The trouble with the EOPS began late last month, when five
trucks ferrying crude on the Lokichar-Eldoret road were forced to return
to the Ngamia-8 site in Turkana East by residents protesting growing
insecurity in the area and “discrimination” by Tullow.
A
few days later, a group of angry residents stormed the Ngamia 8 site
where most of the 80,000 barrels of crude produced is stored, vowing to
disrupt production unless the government guaranteed security in the
bandit-prone area and that Turkana gets its fair share of supply tenders
and jobs in the project.
But Kenyan authorities who
have been negotiating with the community and the joint venture partners
in the project led by Tullow, are yet to arrive at a deal. The first
meeting held two weeks ago agreed that the security and discrimination
issues raised by the community would be urgently addressed and several
public meetings were planned. But The EastAfrican has established that no such meetings took place.
“The
meetings which were to be attended by the national government, Tullow
Oil officials and professionals from this area did not happen,” said
Turkana South MP James Lomenen. “The community feels left out.”
Kenya
planned to export its first oil under the EOPS in June 2017, but
disputes emerged between the national government, the county government
and the community on how the petrodollars would be shared.
In
May this year, an agreement that proposed that 75 per cent of the oil
proceeds would go to the national government, 20 per cent to the county
government and five per cent to the local community was reached, paving
the way for trucking of the crude, starting June 3. But as it is,
parties are not on the same page.
Kenya is expected to
begin small-scale crude oil exports once it accumulates about 400,000
barrels of crude in the refinery in Mombasa.
It hopes
to achieve this target by January or February 2019, and begin full field
production by 2021. That is now in doubt after Tullow admitted that it
was—before the disruption — moving only 600 barrels per day, way below
the 2,000 barrel target it had set.
The second phase of
the project, which includes the laying of a pipeline to the coastal
town of Lamu, is billed to cost more than $3 billion. In Lamu, the
residents have vowed to disrupt works if their grievances on inclusivity
are not addressed.
The new resource-sharing disputes
also reignite the fears that the expected oil dollars could birth a
conflict. When he flagged off the inaugural four trucks ferrying crude
to Changamwe on June 3, President Uhuru Kenyatta warned against the
escalating disputes and possible violence.
“Let me emphasise that we can lose all the benefits if we fail to effectively manage our resources,” the president said.
“The
negative competition for oil and other natural resources has seen
hitherto peaceful countries go to war. It has seen brothers take up arms
against each other as mothers bury their children with no hope for the
future.”
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