M a r k e t N e w s

Kenyans should be the winners in oil contracts

Posted on : Thursday, 27th November 2014

 hen Kenya struck oil in Turkana and Wajir counties a few years ago, majority of Kenyans were excited at the prospect of petrol dollars. Finally, the hitherto dry and poverty-stricken counties were on the cusp of a breakthrough and in the process, Kenya would join the league of oil-rich countries. Oil, as a source of energy, is one of the most sought-after resources in the world. However, emerging reports indicate Kenya could get a raw deal in the exploration and exploitation of the resource. It has emerged that in the contracts Kenya has signed with big oil companies, there is no provision for royalties

 

Ironically, Uganda, has oil contracts stipulating a 12.5 per cent royalty deal. While oil has been a critical and preserve resource, earning countries that produce it, huge amounts of money, the trend is changing. There has been a marked drop in oil price per barrel since June this year. The growth in oil production in the US, using technology that has made it cheaper to produce, has largely contributed to the drop in global oil prices. US oil production levels are at their highest in nearly 30 years. The other is diversification of energy sources. In the past, oil exploitation has been an exclusive venture for the Middle East, but the tide is changing. With all these and other considerations in mind, the Government and all stakeholders should secure deals that will ultimately benefit residents of the oil-producing counties first, then other Kenyans. The deals must also be water-tight and be made public. There is really no reason to make the contracts highly secretive.

Source : Standard Digital
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