This archive report was first published on 1 September 2019.
On September 1, 2019, Kenya flagged off her first consignment of crude oil to China, marking a major milestone in the country's history as an oil exporter.
Kenya is the first East African nation to join the list of oil exporters, with the first consignment estimated to be worth over Sh1 billion.
The new Petroleum Act, passed in March 2019, provides important provisions for the governance of oil resources in Kenya.
According to Article 71 of the Constitution, agreements relating to the exploitation of natural resources require Parliament's nod.
The Petroleum Act regulates exploration, production, separation, treatment, and transportation of petroleum, which are all considered 'upstream petroleum operations.'
Under the law, the government is required to put in place a national petroleum policy in conjunction with stakeholders and to publish a report on its implementation.
This enhances transparency, accountability, and governance in the sector, making the public aware of the implementation of this resource.
Crude oil and other natural resources are owned by the Government as trustee for the people of Kenya, and one major principle guiding their utilisation is the public good.
Before any upstream activity can be undertaken, the applicant must apply for a licence and enter into a petroleum agreement, which can be revoked if deemed to be against public good.
Any unlicensed upstream operations are illegal, punishable by a fine of Sh10 million or a 10-year jail sentence.
For upstream operations, including delivery of crude oil, a petroleum agreement is compulsory, as seen in the dispatch of the crude oil to China last week.
