This archive report was first published on 11 August 2019.
On August 11, 2019, President Uhuru Kenyatta announced that Kenya had become an oil exporter, marking a significant milestone in the country's oil industry. However, the government's secrecy surrounding the exports has raised eyebrows among sector lobbies and civil society.
The first consignment of 200,000 barrels fetched $12 million, with the sweet light crude selling at $60 per barrel, a premium of nearly 40 per cent above the break-even point of $43 per barrel set by the Early Oil Pilot Scheme (EOPS).
Andrew Kamau, Petroleum Principal Secretary, revealed that the first shipment would leave the port of Mombasa at the end of the month, following the upgrade of the existing pipeline and completion of a ship-loading facility. However, he refused to disclose the destination or whether it was bought directly by a refinery or a broker, citing plans to issue an official statement in the coming days.
Civil society has expressed concern over the secrecy surrounding the EOPS, with Charles Wanguhu, Kenya Civil Society Platform on Oil and Gas co-ordinator, stating, 'We note with deep concern that the government has adopted an attitude of non-disclosure.'
Wanguhu emphasized the need for transparency, urging the government to make public the production-sharing agreement signed with Tullow Oil and its joint venture partners. He also questioned the president's announcement, which failed to specify how much of the $12 million would cover the costs of EOPS and how much it would eventually cost taxpayers cumulatively.
Tullow Oil, with a 50 per cent stake in the oil project, is seeking to recoup its investment of $1.8 billion. The government has maintained that the Early Oil Pilot Scheme is necessary as a precursor to full development and commercialisation of the crude oil business, and is not a money-making operation.
Despite the government's claims, the secrecy surrounding the exports has raised concerns over the manner in which the government intends to utilise the $12 million. The National Treasury is yet to table the Kenya Sovereign Wealth Fund Bill, 2019 in parliament, which is designed to provide institutional arrangements for effective administration and efficient management of minerals and petroleum revenues.
