Kenya owes Tullow Oil Sh3.2b, says CS

Friday, May 26th, 2023 06:20 | By
Energy Cabinet Secretary Davis Chirchir.
Energy Cabinet Secretary Davis Chirchir. PHOTO/Courtesy

The State and Turkana community are yet to benefit from the exploration of crude oil discovered in Ngamia I, Energy Cabinet Secretary Davis Chirchir has revealed.

Instead, it is the State that owes Tullow Oil about Sh3.2billion($23.7million) on account of the Early Oil Project Scheme (EOPS) project.

Section 58 of the Petroleum Act 2019, provides for apportioning of the profits of oil from the sale of crude oil between the National government, the County government and the local community.

The crude oil sold from South Lokichar Basin had been produced from exploration and appraisal activities.The cost is commonly referred to as cost oil, while the delta between revenue and cost is referred to as profit oil.

Profit oil to be shared

“It is the profit oil that is shared between International Oil Corporation and the host government. The government share of profit is then shared in line with section 58 of the Petroleum Act 2019,” said Chirchir. While responding to Senator James Lomenen (Turkana) on the reasons for the government’s delay in disbursing funds from the sale of crude oil in 2019 to Chem China International, Chirchir revealed that the community and the government are yet to benefit from the sale of

“Given the foregoing, there was therefore no excess funds to be shared in line with the provisions of the Petroleum Act 2019,” said Chirchir.

Review field development

Asked about the plans the government has to ensure that the Turkana community receives their fair share of the Oil revenue, Chirchir responded that his Ministry is currently reviewing the Field Development (FDP) of the South Lokichar Basin which will soon be tabled in parliament for ratification.

He said that after the ratification, the contractor is expected to make a Final Investment Decision (FID), adding that it will open South Lochar Basin for Full Field Development.

“First Oil is expected three years after FID. All revenue from petroleum will be shared in accordance with section 58 of the Petroleum Act, 2019. The process will be undertaken in strict compliance with the Public Financial Management Act,” said Chirchir. “It was not a commercial production. There was a deficit of this first oil exploration because we were doing to many experiments,” he said

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