This archive report was first published on 27 August 2019.
Kenya's historic export of crude oil this week has sparked optimism about the country's economic prospects. The shipment, which took place after months of anticipation, marks a significant milestone in the country's journey towards becoming a major oil producer.
As the country's economy continues to grow, many are hailing the export as a turning point. However, experts warn that Kenya must be cautious not to fall into the trap of the resource curse, which has plagued many African nations.
Kenya's oil discovery in Turkana in 2012 was met with excitement, but the journey to exportation has been arduous. The country has had to navigate the challenges of drilling and testing to establish the presence, quantity, and quality of the oil.
Under the Early Oil Production Scheme (EOPS), the country recorded another first by transporting crude oil from the Turkana fields to Mombasa for storage in anticipation of exportation. The first shipment of crude oil took place this week, putting Kenya on a pedestal and catapulting it to realms of economic take-off.
However, experts warn that Kenya must pursue a sustainable model of oil exploration and trade. The current business model is rudimentary, with crude oil being transported in trucks from Turkana to Mombasa Port, a distance of 890 kilometres, where it is stored for months. This raises production and management costs, and what is ultimately exported is in raw form, which does not earn the top dollar.
Experts are calling for a clear strategic plan on sustainable exploitation and trade in oil. The conversation must shift from exportation of crude oil to value addition – trade in refined and high-quality oil. Additionally, the government must share resources generated from oil mining with the respective counties, as provided for in the Mining Act 2016.
As Kenya looks to benefit from its oilfields, experts warn that the government must put in place proper systems to guarantee benefits for all. The country must learn from history and avoid the trap of the resource curse that has afflicted many African nations.
