Kenya has announced its first oil discovery and is already discussing plans for the drilling of four exploratory wells this year in a development that portends a new future for Kenya as East Africa’s oil hub. It also comes amid, and could ignite, new security concerns.
On 26 March, Kenyan officials announced a discovery of 20 meters of oil in the Ngamia-1 well in the country’s northwestern Turkana region after drilling to only one-third of the well’s depth. Kenyan President Mwai Kibaki described the discovery as a “major breakthrough” and “the beginning of a long road to make our country an oil producer”, with other officials predicting that it could take up to five years to determine the feasibility of production at Turkana.
On 27 March, the government announced its plans for four exploratory wells with drilling to be undertaken by Tullow Oil Plc (TLW), Apache Corp. (APA) and Anadarko Petroleum Corp. (APC).
“Twenty-meters of net oil pay is a reasonable result, it's certainly something that people in Kenya should be excited by. But the well has a lot further to go as well and there may be more oil there, there may not be, so this is essentially a sort of interim result of something that's exciting, but again, I would stress once more that there's much more work to be done,” Voice of America quoted TLW spokesman George Cazenove as saying.
According to TLW, the oil found in Turkana is similar to the light waxy crude in Uganda.
What this means for Kenya
If further exploration shows commercially viable oil reserves, one of the first benefits will be Kenyan infrastructure, particularly the port of Lamu.
Construction has already begun on the $23 billion Lamu Port South Sudan Ethiopia Transport Corridor (Lapsset), which includes a port and oil refinery in Lamu, in southeastern Kenya, dangerously close to the border with Somalia. The project also includes an oil pipeline, railway and highway linking Lamu to South Sudan and Ethiopia. Newly independent South Sudan is anxious for the project to be completed, as it plans to use Lamu as its main outlet for oil exports. The entire project is slated for completion somewhere around 2015.
The Lamu port project rounds off Kenya’s infrastructure. Its other port of Mombassa on the Indian Ocean will be small in comparison in terms of berth and it has been unable to cope with the demands of landlocked neighboring countries.
On a regional level, the benefits to Kenya could be immense and it will become increasingly more attractive to its landlocked neighbors. Kenya is home to the best potential energy infrastructure, with a seaport at Mombassa, a refinery and the comprehensive Lamu project underway. Kenya is a hub of sorts for East African finance and transport, and it could take advantage of its oil discovery to pursue this status more energetically. It may even be able to lure international oil companies operating in other East African nations to its territory to set up their headquarters, attracted by fewer security threats and better infrastructure. The end result could see a shift from Uganda to Kenya as the “capital” of East Africa’s oil industry.
The Kenyan oil discovery is a development that the East African Community (EAC) should be considering very closely.
Though Kenya enjoys a higher level of security than its neighbors, its first oil discovery comes amid a growing threat from Somali al-Shabaab militants, who earlier this month are suspected by authorities of having been responsible for a grenade attack on a bus terminal in the Kenyan capital, Nairobi, killing six people and wounding more than 60 others. Western officials in January had warned their citizens about traveling to Nairobi, fearing an imminent attack.
However, Al-Shabaab denies involvement in the attack, and this is a significant development that portends a new security paradigm for Kenya. Had it been behind the attack, Al-Shabaab would have claimed responsibility, the point being to send a clear message to Kenya about its interference in Somalia. The denial of responsibility suggests the possibility that a Kenyan Islamist group, possibly seeking to emulate al-Shabaab, has forged stronger roots.
Kenya is targeted by al-Shabaab due to its deployment of troops to Somali in October 2011, where thousands of Kenyan soldiers are fighting militants in the south. Only two weeks after that October deployment, al-Shabaab struck back with two grenade attacks in Nairobi, one in a bar and one at a bus stop. Al-Shabaab is also believed to have undertaken a number of kidnappings on Kenyan territory recently.
But Kenya is not backing down over Somalia. On 25 March, the Kenyan Defense Forces (KDF) launched air strikes destroying three al-Shabaab bases and reportedly killing 13 al-Shabaab fighters.
Another security concern will be Turkana itself, the location of Kenya’s first oil discovery.
Turkana is home to marginalized people and suffers from severe underdevelopment, coupled with a high level of corruption, which translates into insecurity.
On 25 March, eight people were killed in clashes between police and rival animal rustlers in Turkana County. Officials said the clashes were the result of disputes between two communities over pasture, water and territorial boundaries. But the situation is indicative of a greater problem, and adding oil to this equation is likely to intensify inter-ethnic, community rivalry in this area.
By Jen Alic of Oilprice.com
Jen Alic is a geopolitical analyst, co-founder of ISA Intel in Sarajevo and Tel Aviv, and the former editor-in-chief of ISN Security Watch in Zurich.