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Kenya Cuts Share Of Oil Revenues To Local Communities

Lokichar basin drilling

Kenya has decided to allocate 20 percent of future oil revenues to the communities where crude oil has been discovered, cutting the share from an initial proposal to give local counties and communities 30 percent of future oil income, a senior Kenyan government official told Reuters on Friday.

In November 2017, Kenya planned to give 30 percent of oil revenues to the local communities, backtracking on a previous proposal to cap revenues at specific amounts in what analysts saw largely as a political move.

In a first draft of the oil revenue bill, Kenya’s government had indeed proposed 30 percent of oil income to go to local governments and communities, but it later withdrew the proposed legislation, citing “typographical errors”, according to Reuters.

Now Kenya plans to submit a new bill to Parliament in February, with the 20-percent oil revenue for the places where oil is located divided between 15 percent to the local county government and 5 percent to the community, the principal secretary for petroleum at the Ministry of Energy, Andrew Kamau, told Reuters today.

“The national government looks at everybody’s interests. So there is no way we are trying to take away something from the oil producing communities,” Kamau said. “It is all about sustainability,” he added.

Government estimates put future oil revenues at around US$1.2 billion annually at peak production and based on current oil prices, according to Kamau.

Related: Rig Count Shoots Up As Oil Nears $70

Commercial quantities of crude oil in Kenya were discovered in 2012 in the far northern county of Turkana. Tullow Oil, which discovered the resources, has continued its exploration and appraisal drilling campaigns in Kenya, and an initial assessment indicates recoverable resources of up to 750 million barrels of oil. Tullow Oil is currently reviewing the data from the South Lokichar basin and plans to announce its assessment of contingent resources as well as its plans for developing the basin in the first quarter this year.

At the end of October 2017, Kenya’s government signed a Joint Development Study Agreement (JDA) with Tullow Oil, Africa Oil, and Maersk Oil for a proposed Lokichar-Lamu crude oil pipeline between the Turkana county and the Lamu port on the coast.

By Tsvetana Paraskova for Oilprice.com

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