Tullow Threatens to Derail Kenya’s Fledgling Oil Industry

Kenya’s oil industry is facing new challenges as Tullow Oil threatened over the weekend to shut down its oil wells in the Lokichar basin if the government does not act soon to remedy production, security, and transportation problems.

Tullow has endured many hardships since it found oil in 2012 after almost six decades of exploring, most recently overcoming what was a particularly difficult obstacle when the government and Tullow finally came to a revenue sharing agreement.

Yet other problems persist.

Tullow oil is now facing supply shortages—supplies that are necessary to run the Kapese Integrated Operation Base. Protesters also blocked trucks ferrying the crude oil late last month, forcing the trucks to turn around and return to the site. The protestors cited disgruntlement with what they perceive as growing insecurity in the region and even discrimination by Tullow.

The protests continued in the days that followed as protesters threatened to derail oil production should the government fail to ensure security in the “bandit-prone” area, according to the East African. Protestors were also demanding that Turkana be awarded supply tenders and jobs for Tullow’s future projects.

Meetings were scheduled between the local community, Tullow officials, and national government to find a resolution, but according to the East African, those meetings never happened.

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Crude oil could be a boon for Kenya’s economic growth, although resources as profitable as oil often breeds controversy, corruption, and instability. Kenya’s President Uhuru Kenyatta said that Kenya would look to avoid this resource curse that other countries have fallen prey to, although all signs point to this end.

The current oil production and exports are part of Kenya’s Early Oil Pilot Scheme which will move crude oil from Turkana County to Kenya’s coast until a pipeline can be built. Commercial production is expected to begin when the pipeline is constructed—the completion of which is expected in 2021 provided Tullow can find a way forward through the in-country instability.

By Julianne Geiger for Oilprice.com

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